Bitcoin ETFs Sold Through Most Crashes, DWF Labs Analysis Shows

Institutional Selling Dominates Bitcoin Downturns

US spot Bitcoin exchange-traded funds (ETFs) recorded outflows during seven of the eight major market declines since their launch in January 2024, a new report reveals. This pattern contradicts the common belief that institutional investors act as a steady source of buying pressure when prices fall.

The findings, shared by DWF Labs with CryptoSlate, cover 694 trading days through October 16, 2026. The data shows that while Wall Street’s involvement has made Bitcoin crashes slower and less frequent, these financial flows often withdraw capital during the final stages of a downturn rather than supporting the price at the bottom.

Record Withdrawals During Recent Crashes

• Investors withdrew a record $8.2 billion during the 28.8% price drop between May and June 2026.
• This followed $6.9 billion in withdrawals during the decline from October 2025 to February 2026, when Bitcoin lost nearly half its value.
• Both events surpassed the $3.4 billion withdrawn during the January to April 2025 correction.
• ETF investors continued withdrawing money at seven of the eight market bottoms studied, while purchases peaked at seven of the eight market highs.

Flows Track Past Prices, Not Future

The research indicates that ETF investors tend to buy when prices are already rising and sell when prices are falling. Statistical analysis shows a strong correlation between ETF flows and Bitcoin’s performance over the previous five days (0.54), but a very weak correlation with the following five days (0.03).

This weakens the utility of ETF inflows as a forward-looking signal. For example, BlackRock’s iShares Bitcoin Trust (IBIT), the largest product in the market, saw its flows correlate only 0.04 with Bitcoin’s subsequent five-day returns. After IBIT’s largest inflow days, Bitcoin advanced in the next 20 days only 47% of the time, slightly lower than the average across all trading days.

Implications for Market Confidence

The data highlights a paradox in Bitcoin’s evolving market structure. Although increased liquidity from institutional products has made sell-offs less violent and less frequent, it has not stopped billions in withdrawals during significant declines. The report suggests that large ETF purchases do not necessarily signal fresh bullish positioning or predict upcoming rallies, complicating the use of fund flows as a primary indicator for future price direction.

Sources

• CryptoSlate

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