Hedge Funds Exit US Bitcoin ETF Market Amid Shift in Institutional Appetite

Hedge funds that invested in US Bitcoin exchange-traded funds (ETFs) are now exiting the market, leading to significant outflows. This shift is attributed to changing institutional appetite from aggressive momentum to traditional safe-havens, and the unwinding of basis trades that fueled earlier gains.

According to recent data, spot Bitcoin ETF assets have dipped below $100 billion for the first time since April 2025, with nearly $1.3 billion leaving crypto ETFs so far this year. This decline suggests that investors are moving into 'safety mode' across the board rather than just losing interest in ETFs.

The slowdown in institutional demand is also reflected in flows into spot Bitcoin exchange-traded funds (ETFs), with nearly $4.5 billion in outflows since the start of 2026, partially offset by only $1.8 billion in inflows during the first and third weeks of the year.