Bitcoin and Ethereum, the two largest cryptocurrencies by capitalization, are seeing sustained net capital outflows from their respective exchange-traded funds (ETFs). According to analytics firm Glassnode, this dynamic reflects a partial withdrawal of institutional investors, who are reducing their exposure rather than injecting new capital. While this does not reflect a complete disengagement from the crypto market, these persistent outflows suggest a decline in institutional participation, likely to limit liquidity and dampen price momentum in the near term.
In brief
- Institutional involvement in Bitcoin and Ethereum ETFs is declining, with the 30-day moving average showing consistent net outflows.
- Large investor activity, combined with falling ETF balances from previous highs, has dampened bitcoin's price recovery and limited short-term gains.
- Some funds, like BlackRock's iShares Bitcoin Trust, however, continue to attract capital on certain days, retaining significant holdings despite the overall market decline.
Institutional exits persist
Glassnode highlighted that the 30-day moving average of net flows into US spot Bitcoin ETFs and Ethereum ETFs has turned negative and remains there. This prolonged trend reflects a phase of reduced participation and a partial disengagement of institutional investors, reinforcing a more general contraction of liquidity in the crypto market.
ETF flows have declined since mid-October, a move that tends to follow developments in the cash market. These funds often reflect institutional investor sentiment, which has played a key role in crypto market dynamics this year. At present, this sentiment appears more cautious, in line with the overall market slowdown.
The Kobeissi Letter reported Tuesday that the sales pressure on crypto ETFs is back. Last week, these funds recorded $952 million in withdrawals, bringing the number of weeks of outflows to six over the last ten. Ethereum ETFs lead with $555 million, followed by Bitcoin funds at $460 million, illustrating continued capital outflows.
The trend continued this week. SoSoValue data indicates that institutional activity has remained erratic:
- Bitcoin saw outflows of $142.19 million on Monday and $188.64 million Tuesday.
- Ethereum saw a modest inflow of $84.59 million on Monday, quickly followed by an outflow of $95.5 million on Tuesday, demonstrating unstable institutional support.
Whale Activity, ETF Holds Limit Bitcoin Recovery
This persistent pullback is part of a broader selling pressure identified by CryptoQuant, which links bitcoin's slow recovery to the activity of large investors. ETF holdings from their all-time highs, combined with continued sales of whales since Octoberweighed on the price dynamics of bitcoin and limited its upside potential in the short term.
Despite these overall outflows, BlackRock's iShares Bitcoin Trust (IBIT) saw modest inflows on some days. Notably, Farside Investors reported inflows of $111.2 million on December 17 and $32.8 million on December 18. Since its launch, the fund has accumulated $62.34 billion, maintaining its status as the largest spot Bitcoin ETF and surpassing its competitors in terms of total holdings.
Eric Balchunas, senior ETF analyst at Bloomberg, said IBIT is the only ETF in Bloomberg's “2025 Flow Rankings” to post a negative return this year. Despite this, the fund ranks sixth in terms of inflows and has attracted more investment than SPDR Gold Shares (GLD), yet up 64% over the same period, underscoring its continued appeal despite general market weakness.
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