Crypto ETF Outflows Signal De-risking to Asian Banks

The core flow data shows a clear tactical rotation away from Bitcoin. On February 3, U.S.-listed spot bitcoin ETFs saw about $272 million in net outflows, even as the price swung sharply. This selling coincided with a selloff in tech stocks, highlighting Bitcoin's growing sensitivity to broader market stress.

The outflow is not a wholesale exit from crypto. Instead, capital is rotating within the asset class. On the same day, spot ether ETFs posted net inflows of about $14 million and XRP-focused products attracted nearly $20 million. This split signals investors are de-risking from Bitcoin while seeking exposure to other crypto assets perceived as offering distinct use cases or relative value.

This tactical de-risking contrasts with a rebound in Asian investment banking. After a slump, the region is at a positive inflection point. Total investment banking revenue across deal advice, equity and debt underwriting hit almost $17 billion in 2025, and volumes so far in 2026 look set to outpace the peak four years ago.

Price Action and Flow Correlation

The breakdown in Bitcoin's price triggered a sharp, correlated sell-off in its ETF proxies. On Thursday, the cryptocurrency plunged more than 13% to trade around $63,300, breaking below the $70,000 technical support level and falling beneath its 50-day moving average. This breakdown directly caused the largest single-day declines in the major ETFs, with the iShares Bitcoin Trust (IBIT) dropping more than 13% and registering its worst day since August 2024.

This price action confirms Bitcoin's status as a momentum-driven asset where sentiment shifts rapidly. As noted by a Schwab analyst, Bitcoin is "a momentum market", meaning its price is heavily driven by investor sentiment. The drop below key technical levels and the subsequent ETF selloff have intensified selling pressure, as more ETF holders now face losses and may exit to cut them.

The flow data reflects this de-risking in real time. While the iShares trust saw net outflows of about $34 million through Wednesday, the Thursday sell-off was severe enough to overwhelm any attempt at buying the dip. The sharp price drop and ETF declines signal a rapid deterioration in sentiment that is difficult to reverse without a clear new catalyst.

Catalysts and What to Watch

The immediate technical level to watch is a sustained retest of the $70,000 support level. A decisive break above this price would signal a recovery in momentum and could halt the outflow trend. Conversely, a failure to hold above it would likely confirm the breakdown and invite further selling pressure from ETF holders now sitting on losses.

The rotation into ether and XRP ETFs needs to be monitored for sustainability. The recent inflows of about $14 million into ether ETFs and nearly $20 million into XRP products validate the tactical shift away from Bitcoin. If this flow continues, it suggests the de-risking is a reallocation within crypto, not a flight to cash. A reversal in these flows would be a red flag.

The key risk is a broader market sell-off spilling into other crypto assets. Bitcoin's sensitivity to tech stocks, as noted by a Schwab analyst, means a deep selloff in equities could widen outflows beyond Bitcoin into ether and XRP. This would transform a tactical rotation into a full-blown market de-risking, pressuring the entire crypto asset class.