US Spot Crypto ETFs See Sharp Capital Rotation as Bitcoin and Ethereum Face Sustained Outflows

US-listed spot Bitcoin ETFs have recorded over $1.13 billion in outflows over three consecutive days. This followed a strong start to the year when the same funds generated nearly $1.2 billion in inflows within the first two trading days. The sudden shift highlights capital rotation and a shift in investor sentiment toward more cautious positioning.

BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's FBTC led the outflows during the three-day period. These funds accounted for the majority of redemptions, indicating structural adjustments by institutional players rather than retail panic. The outflows suggest a broader market repositioning amid macroeconomic uncertainties.

The selling pressure is not isolated to Bitcoin. Ethereum spot ETFs also posted net outflows, totaling roughly $258 million in the same period. While Ethereum ETFs started the year with modest inflows, recent activity has reversed that trend. The synchronized movement across both BTC and ETH ETFs indicates a coordinated strategy rather than a sudden loss of confidence.

Why Did This Happen?

Market analysts attribute the outflows to portfolio rebalancing and profit-taking following the initial year-end rally. The inflow surge in early January was driven by institutional demand, particularly after a quieter December. However, the subsequent outflow pattern suggests investors are locking in gains and reassessing exposure in light of macroeconomic headwinds.

The shift also coincides with a broader trend of capital rotation into equities and physical safe havens such as gold. Central banks have been actively diversifying away from the US dollar, increasing their gold holdings. This trend has driven gold prices higher and created a more competitive environment for digital assets like Bitcoin.

How Did Markets Respond?

Bitcoin's price action has mirrored the ETF outflow pattern. The asset briefly tested support below $90,000 after reaching a peak above $94,000. The on-chain data indicates that the selling pressure is not driven by short-term holders but rather by larger players using liquid instruments to reposition capital.

Institutional holders, including MicroStrategy, continue to provide a floor for Bitcoin's price. The company's large Bitcoin treasury suggests a reduced likelihood of a catastrophic sell-off. This institutional floor is a structural change from previous bear cycles, where price collapses were more common.

What Are Analysts Watching Next?

Key metrics like Bitcoin's Apparent Demand and MVRV ratio are flashing caution signs. Both indicators suggest that new capital absorption has slowed, and the asset is in a period of consolidation. This divergence from price action indicates that short-term positioning is driving recent rallies rather than durable accumulation.

Analysts are closely monitoring the US labor market for clues about the strength of the dollar and potential rate-cut expectations. A stronger-than-expected jobs report could reinforce the dollar's recent strength, further weighing on both gold and Bitcoin. Conversely, weaker data could reignite liquidity hopes and support a crypto rebound.

The broader ETF landscape also shows mixed signals. While Bitcoin and Ethereum ETFs face sustained outflows, XRP and Solana ETFs continue to see positive flows. This suggests that investors are selectively rotating into crypto assets rather than exiting the market entirely.

Investor sentiment remains cautious as the market navigates a period of structural adjustment. The ETF ecosystem has matured, but with that maturity comes increased correlation with traditional asset classes and macroeconomic factors. Whether this trend continues will depend on how quickly on-chain demand metrics recover and how institutional allocations evolve in response to shifting market conditions.

The market is now in a phase of "boring sideways" movement as capital reallocates across asset classes. Bitcoin's institutional floor and evolving macroeconomic environment will play a decisive role in shaping the next phase of investor behavior.