Recent data from Glassnode reveals that U.S. spot Bitcoin exchange-traded funds (ETFs) have experienced their most significant balance drawdown of the current market cycle, a trend that has emerged in the wake of an all-time high in early October. Since then, these ETFs have seen a total decline of approximately 100,300 BTC, bringing their total holdings down to roughly 1.26 million BTC.
The decrease in holdings underscores a pattern of sustained net outflows, as investors have been pulling capital from spot ETFs, prompting these funds to reduce their Bitcoin reserves. In January alone, a staggering $1.6 billion was withdrawn from these ETF products, extending a trend of monthly outflows that began in November 2025.
This decline in ETF balances is coinciding with a broader downturn in the Bitcoin market. After reaching a peak of $126,000 in October, Bitcoin’s price has trended downward, escalating fears and uncertainties among investors. Experts suggest that while spot ETFs were initially perceived as a structural catalyst for Bitcoin’s rise, they may also have exacerbated downward pressure during periods of redemption. Notably, in early February, renowned analyst Arthur Hayes pointed out that institutional dealer hedging activities are likely contributing to the selling pressure on BTC prices.
“Institutional de-risking has added structural weight to the ongoing weakness, reinforcing the broader risk-off environment,” Glassnode noted.
Moreover, the current situation is complicated by rising unrealized losses among ETF investors. The average entry price for U.S. spot Bitcoin ETF investors is approximately $83,980 per BTC, whereas Bitcoin is trading around $67,349. This discrepancy indicates that investors are facing paper losses of about 20%.
The outflows are not limited to Bitcoin alone; recent reports from BeInCrypto indicated that digital asset funds have faced significant withdrawals, with $173 million exiting in just one week. This marks the fourth consecutive week of redemptions, cumulatively amounting to $3.7 billion during this period.
Despite the prevailing pessimism, analysts are urging a more comprehensive view of the ETF landscape. Bloomberg’s senior ETF analyst, Eric Balchunas, highlighted that cumulative net inflows into Bitcoin ETFs still stand at around $53 billion. This figure reflects a significant drop from a peak of over $63 billion reached in October 2025, even with the recent outflows. Balchunas commented on the broader context, suggesting that initial estimates predicted $5-15 billion in the first year, indicating that the outflows must be viewed with this perspective in mind.
When examining the data holistically, the current retracement appears to embody cyclical risk reduction rather than a fundamental structural reversal. ETF flows have been magnifying both upward and downward market movements, further integrating Bitcoin into the traditional capital markets. Although short-term pressures might persist amid ongoing macroeconomic uncertainties, the rapid pace of institutional adoption since the ETF’s inception suggests that Bitcoin’s integration into Wall Street portfolios remains robust.
