Bitcoin is trading near $61,500 as US spot ETF investors yanked $1.79 billion from funds this week, according to The Block. The outflows mark a sharp reversal from the inflows that followed the funds' launch in early 2024, when institutional appetite looked unshakeable.
The selling pressure mirrors a broader retreat from risk assets. Tech stocks have slumped on growing bets that the Federal Reserve will raise interest rates rather than cut them in coming months. Those bets tightened this week as inflation data and Fed commentary shifted trader expectations. When investors flee growth bets and seek shelter in safer assets, they often sell crypto holdings to raise cash or reduce portfolio leverage.
Spot Bitcoin ETFs have become a primary on-ramp for institutional capital into crypto. The $1.8 billion weekly exodus—one of the largest since the funds launched—signals either conviction that prices will fall further or a tactical rotation out of digital assets entirely. Bitcoin's perch near $61K leaves it vulnerable if the level breaks; a dip toward $58,000 to $59,000 would test the next meaningful support zone, analysts told The Block.
The AI sector sell-off has been particularly sharp, with mega-cap tech names cratering on valuation concerns and margin dynamics. Some traders holding both AI equities and crypto may have liquidated or trimmed their digital-asset positions to cover losses elsewhere.
The Fed's policy path now shapes Bitcoin's next move more than crypto-specific catalysts. If rate hike expectations stick, bond yields will climb and the carry trade that props up risk assets will lose its appeal. Bitcoin, which offers no yield, often underperforms in that regime. Conversely, if inflation data turns cooler and the Fed signals flexibility, inflows could return quickly.
The spot ETF outflows are not yet dramatic enough to declare a trend break. Cumulative inflows since launch remain well into the billions, and weekly volatility is normal. But the shift from consistent buying to sudden selling suggests institutional conviction has cracked, at least temporarily. Traders watching the funds should monitor whether next week's flows reverse or accelerate the retreat.