Bitcoin Hits Year-To-Date Low Amid Heavy Outflows, Signs Of Spot Buying Emerge

Bitcoin (BTC) fell to a year-to-date low of $74,500 on Monday, marking a 38% decline from its peak. The drop came as heavy outflows continued from major U.S. spot ETFs, pushing overall fund flows into deep negative territory. The sharp decline in price has triggered a wave of sell-offs, pushing the month of January into negative territory despite the substantial cumulative net inflows since the launch of Bitcoin ETFs.

January 2026 saw total net outflows of roughly $1.6 billion from Bitcoin ETFs, making it the third-worst month on record for the products. The selling pressure intensified sharply in the final two sessions of the month, with a single-day outflow of $818 million recorded on January 29. The four-day stretch from January 28 through 31 recorded outflows every session, with a marginal $7 million inflow on January 26.

On Monday, Bitcoin ETFs recorded their first net inflows in five sessions, drawing $561.89 million in fresh capital. BlackRock’s IBIT led the inflows with $141.99 million, followed by Fidelity’s FBTC at $153.35 million and Bitwise’s BITB with $96.5 million. The inflows reflect renewed interest from institutional investors who view current prices as attractive.

The sharp decline in Bitcoin ETF flows in January has had a direct impact on the price of BTC, which has dropped below the ETF cost basis. Galaxy Digital’s head of research Alex Thorn noted that Bitcoin is now trading 7.3% below the average ETF create cost basis of $84,000. This level, last seen in summer and early fall 2024, is expected to serve as near-term support.

Bitcoin’s price has also dipped below the cost basis of Microstrategy’s Bitcoin holdings for the first time since October 2023, briefly trading below $76,037 per Bitcoin. The decline in price led to significant unrealized losses for companies like Microstrategy, which has a large Bitcoin holding.

Why Did This Happen?

The synchronized selling across Bitcoin and Ethereum ETFs suggests institutional investors were reducing overall crypto exposure rather than rotating between assets. The selloff accelerated after former Federal Reserve Governor Kevin Warsh was selected as the next Fed chair, a choice markets interpreted as bearish for risk assets. Geopolitical flashpoints, including an explosion at Iran’s Bandar Abbas port and a brief U.S. government shutdown, also contributed to the risk-off tone.

The ETF landscape has continued to expand despite the outflows. Morgan Stanley filed registration statements with the SEC earlier this month to launch spot Bitcoin and Solana ETFs, signaling that institutional interest in regulated crypto exposure persists. The continued institutional interest shows that despite short-term volatility, the market is maturing.

The outflows from Bitcoin ETFs have also been mirrored by Ethereum ETFs, which recorded approximately $353 million in net outflows for January. The final week of the month saw a particularly brutal session, with $253 million in outflows on January 30, led by outflows from BlackRock’s ETHA and Fidelity’s FETH.

How Did Markets Respond?

Bitcoin ETF inflows returned on Monday as dip buyers stepped in, with the U.S. spot Bitcoin ETF market recording net inflows of $561.89 million. This marks the first time in five days that ETFs have seen a positive flow, indicating that institutions are starting to view current prices as attractive. The inflows are significant because they reflect direct buying of Bitcoin rather than short-term speculation.

Ethereum ETFs did not manage to record any inflows on Monday, posting minor outflows of $2.9 million. In contrast, newer altcoin ETF products showed resilience, with spot Solana ETFs recording approximately $105 million in net inflows for January. XRP ETFs also posted modest net inflows of roughly $16 million for the month.

The mixed signals for the top two digital assets were reflected in ETF flows. Bitcoin holders deposited 3,220 BTC into leading centralized crypto exchanges, recording a net inflow of $252.6 million. On the other hand, Ethereum registered a net outflow of 143,640 ETH from CEX platforms, worth just over $335 million at current prices.

The rebound in Bitcoin price has been supported by increased on-chain and spot-volume signals indicating that bargain hunting has started. Traders who want exposure to Bitcoin will need to weigh the low valuation readings and pockets of buying against the very real possibility of further weakness if sentiment deteriorates again.

What Are Analysts Watching Next?

Bitcoin’s MVRV Z-score has reached record lows, suggesting that the asset is undervalued compared to past bear market bottoms. The metric, which compares the market value of Bitcoin to the realized value of all Bitcoin at their purchase prices, has fallen to levels not seen since October 2022. This suggests that the market is close to the end of its current correction.

Analysts are also watching for signs of accumulation from whales or long-term holders. Galaxy Trading and Galaxy Asset Management reported that 46% of Bitcoin supply is now underwater, meaning that the coins previously moved onchain when prices were higher are now trading at a loss. However, long-term holder profit-taking has begun to abate, which could indicate a shift in investor behavior.

The launch of new ETF products, such as the VistaShares BitBonds 5 Yr Enhanced Weekly Option Income ETF (BTYB), could also influence investor sentiment. The fund is designed to provide exposure to Bitcoin price moves while offering enhanced income through an options strategy. This type of product may attract a new class of investors who are looking for a combination of income and growth.

The continued institutional interest in Bitcoin ETFs, as evidenced by the recent filing from Morgan Stanley, also suggests that the market is evolving. Despite short-term volatility, the ETF landscape is expanding, and institutional demand for regulated crypto exposure remains strong.

Investors are also watching for signs of further support from macroeconomic factors. Easing geopolitical tensions between the U.S. and Iran have improved risk appetite slightly, which could benefit Bitcoin in the near term. However, the overall trend remains bearish, and traders should be cautious.