Declining Demand Triggers Consecutive Outflows in Bitcoin Spot ETFs

US Bitcoin spot ETFs experienced three consecutive days of outflows through Thursday, signaling a cooling of the early-year optimism as traders reassessed market risk levels. On Thursday alone, these ETFs recorded outflows of $205.5 million, bringing the cumulative outflows over the three-day period to $934.8 million, according to FarSide data.

Although inflows have exceeded outflows on only two days since the start of the year, the net seven-day inflows, which sum all inflows over a specific period, remain positive at $240.7 million. While spot ETF inflows tend to lag slightly behind broader market movements, they often serve as an indicator of cryptocurrency market trends and can influence the price trajectory of the underlying assets.

In terms of price action, Bitcoin’s year-to-date gains have halved, dropping from around 8% on Wednesday to approximately 4% on Thursday. The largest cryptocurrency by market capitalization stabilized at $91,100 over the past 24 hours, after briefly dipping below $90,000 the previous day, according to CoinGecko data.

Shawn Dawson, head of research at the blockchain options trading platform Derive, told Decrypt: “It’s not surprising to see ETF investors reducing their risk exposure. The current outflows largely reflect tactical positioning and a shift in market sentiment, rather than a sudden collapse in underlying demand.” He added that several factors have contributed to the continued outflows, including year-end capital reallocation, Bitcoin’s inability to break through the $92,000 resistance level, heightened macroeconomic uncertainty following the US intervention in Venezuela, and deteriorating US economic indicators, such as rising unemployment claims.

This declining demand for spot ETFs coincides with a notable oversupply on the blockchain network, which continues to weigh on price movements. Early-year rallies had propelled Bitcoin above $94,000, entering a zone dominated by large buyers whose purchase prices ranged between $92,100 and $117,400, according to a Glassnode report released on Wednesday.

Glassnode analysts noted that market pressure is building from sellers looking to break even, as these investors regain the opportunity to exit positions without incurring losses. They emphasized, "Any attempt to sustain an upward trend will likely require time and resilience to absorb this excess supply", highlighting the challenges for Bitcoin in maintaining momentum amid a complex mix of macroeconomic and market-specific pressures.