Bitcoin spot exchange-traded funds (ETFs) have faced significant outflows, totaling $1.62 billion over the past four trading days. This trend raises concerns about hedge funds reducing their exposure to Bitcoin amidst changing market conditions. The withdrawals come as Bitcoin struggles to reclaim crucial price levels, while a popular institutional arbitrage strategy is losing its effectiveness.
As of January 22, 2026, US-listed Bitcoin ETFs reported net daily outflows of $32.11 million, following a striking peak of $708.71 million on January 21, and $483.38 million on January 20, according to data from Sosovalue. Over the last week alone, net outflows have reached approximately $1.22 billion. Despite this, trading activity remained robust on January 22, with Bitcoin spot ETFs recording a volume of $3.30 billion, even as assets under management decreased to $115.99 billion—about 6.49% of Bitcoin’s total market cap.
Leading these outflows was BlackRock’s iShares Bitcoin Trust, which saw $22.35 million redeemed, equivalent to around 249.5 Bitcoin. Nonetheless, IBIT continues to dominate the market with $69.84 billion in assets, holding nearly 4% of the Bitcoin supply represented in ETFs.
Following IBIT, Fidelity’s FBTC experienced $9.76 million in outflows, while Grayscale’s GBTC saw no change in daily flows, remaining significantly negative with cumulative net outflows of $25.58 billion, as investors shift away from its higher fee structure of 1.5%.
Most other issuers—including Bitwise, Ark, 21Shares, VanEck, Invesco, Valkyrie, Franklin, and WisdomTree—showed largely unchanged flows, indicating a temporary pause rather than widespread panic selling in the market.
The withdrawal from ETFs has coincided with a decline in Bitcoin’s price. On January 22, Bitcoin was priced at approximately $89,982, a decrease of 1.3% for the day and nearly 5% over the preceding week, having briefly dipped to $88,600.
Trading volume has also diminished, dropping nearly 28% to $37.77 billion, signaling a contraction in market participation as prices stabilize below the $90,000 mark.
Market analysts point to hedge fund activities as a principal factor driving the ETF outflows. According to Amberdata, yields on the Bitcoin basis trade—a strategy involving purchasing spot Bitcoin via ETFs while concurrently selling futures to capture price differentials—have plummeted below 5%, down from around 17% a year prior. As these potential returns diminish and approach yields available on short-term US Treasuries, the incentive for fast-moving capital to remain invested lessens. While hedge funds may constitute only 10% to 20% of ETF holders, their activities can heavily influence short-term flows when these strategies underperform.
Bloomberg data reflects a similar decline in derivatives markets, with Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) falling beneath that of Binance for the first time since 2023. This indicates a reduction in participation in cash-and-carry trades among US institutions since the launch of ETFs there.
Moreover, one-month annualized basis yields are hovering around 4.7%, marginally above funding and execution costs, as spreads tighten and arbitrage opportunities wane. Indicators from CryptoQuant suggest a shift in demand, with large wallets moving from accumulation to distribution. Additionally, the Coinbase premium remains negative, indicating diminished interest from US institutions.
As leverage in Bitcoin futures has increased to its highest level since November, the market’s sensitivity to sharp movements in either direction has intensified. Flows in other crypto ETFs highlight that the sell-off is not comprehensively affecting all digital assets. Ethereum spot ETFs, for instance, reported heavy outflows this week, including $41.98 million on January 22, while products linked to XRP and Solana observed modest inflows, suggesting a selective repositioning among institutions rather than a blanket withdrawal from the digital asset space.
