Institutional Investors Retreat From Bitcoin Amid Growing Narrative Shift

Institutional investors are increasingly pulling back from Bitcoin, with some crypto hedge funds reporting zero exposure to the asset. This move comes as experts suggest that Bitcoin is facing an 'identity crisis', with its core narratives under pressure.

The shift away from Bitcoin has been driven by a range of factors, including lower reward-to-risk and uncertainty in the macroeconomic backdrop. According to Nic Puckrin, co-founder of Coin Bureau, the average cash balance held by crypto hedge funds has risen to levels not seen since early 2025.

This marks a fundamental reassessment of digital asset strategies among professional money managers. The move away from Bitcoin is also reflected in flows into spot Bitcoin exchange-traded funds (ETFs), which have recorded nearly $4.5 billion in outflows since the start of 2026.