Bitcoin ETFs Bleed $1.7B as Institutions Flee ‘Digital Gold’ Narrative
Institutional investors withdrew $1.73 billion from crypto funds last week, led by BlackRock, as Bitcoin failed to act as a safe haven against US shutdown fears.
Institutional capitulation hit the crypto market this week.
Investment products saw $1.73 billion in outflows last week, the largest exodus since November 2025, according to CoinShares data released Monday. The narrative of Bitcoin as a hedge against fiscal chaos is buckling under pressure; while gold surged to a record $5,000/oz, crypto assets traded like high-beta tech stocks, dumping on the exact news, US government shutdown fears, that was supposed to send them higher.
The Receipt: BlackRock Leads the Exit
The numbers paint a grim picture of US institutional sentiment. American investors withdrew nearly $1.8 billion, while contrarian buying appeared only in Switzerland, Germany, and Canada. The specific issuer breakdown reveals where the panic lies:
- BlackRock (IBIT): $951 million outflows.
- Fidelity (FBTC): $469 million outflows.
- Grayscale: $270 million outflows.
James Butterfill, Head of Research at CoinShares, noted the driver isn’t just price action. It’s a fundamental reassessment. “Dwindling expectations for interest rate cuts and disappointment that digital assets have not participated in the debasement trade have likely fuelled these outflows.”
The safe-haven rotation is real, but it bypassed Bitcoin entirely. Gold is at all-time highs. Bitcoin is down 5% to $86,400.
Macro Crosscurrents: The ‘Shutdown’ Threat
Traders are de-risking ahead of a potential US government shutdown. Senate Democrats have vowed to block funding for the Department of Homeland Security, creating a deadlock that markets despise. Historically, Bitcoin thrives on fiscal irresponsibility, but current price action suggests institutions view this simply as a liquidity crunch. The correlation with traditional risk assets has tightened; when the S&P 500 sneezes, crypto now catches a cold.
The Outlier: Solana
Amid the carnage, smart money found a target. Solana (SOL) bucked the trend with $17.1 million in inflows, suggesting a rotation rather than a complete market exit. Ethereum did not share this fate, shedding $630 million, further cementing its struggle to retain institutional attention against its faster L1 rival.
Market Impact
Bitcoin (BTC) is currently trading at $86,450, struggling to hold the mid-$80k support. The $1.7 billion liquidity drain has left order books thin. If the US shutdown materializes later this week, the lack of bid depth could exacerbate volatility downward, regardless of the long-term “store of value” thesis.
