The narrative of unstoppable institutional adoption is facing a reality check. U.S. spot Bitcoin ETFs are currently on track for their fourth consecutive month of net outflows, a trend that mirrors Bitcoin’s struggle to find a price floor in early 2026. As fund balances shrink, analysts are looking at macroeconomic headwinds and a resurgence in gold demand to explain the slump.
Shrinking Balances and Fading Momentum
The “ETF effect” that propelled Bitcoin to new heights in late 2024 has notably stalled. Since peaking at nearly $170 billion in October 2025, the net assets held in these funds have plummeted to $84.3 billion.
The data reveals a consistent “supply-side” pressure from the funds:
- Accumulation Drought: Researcher Axel Adler Jr. noted that out of seven recent trading sessions, only two were positive. A single-day outflow on February 12 saw 6,120 BTC ($416 million) leave the funds.
- Major Fund Reductions: Even the giants aren’t immune. BlackRock’s IBIT saw a 6% decline in its holdings, while Fidelity’s FBTC dropped by 12.6% from its peak.
- Macro Drain: Since November 2025, approximately 87,000 BTC has been shed from ETF balances, bringing the total held by these instruments down to 1.26 million BTC.
The Great Rotation: Gold Reclaims the Spotlight
A fascinating “handoff” is occurring between digital and physical gold. Throughout 2025 and early 2026, institutional capital has appeared to rotate between these two assets based on market volatility.
While Bitcoin ETF inflows faded in the final quarter of 2025, gold ETFs surged, reaching $29 billion in inflows by January 2026. Historically, when Bitcoin demand cools, investors lean back into gold for its longer track record and lower price swings during “risk-off” phases. This suggests that the capital isn’t necessarily leaving the market—it’s just seeking a more stable harbor.
“Restrictive Digestion”: The Macro Hurdle
Why the sudden hesitation? ITC Crypto founder Benjamin Cowen describes the current climate as a “late-cycle restrictive digestion” phase.
Several economic factors are tightening the screws on crypto demand:
- High Real Yields: With 10-year real yields holding around 1.7%–1.8%, investors can earn solid, inflation-adjusted returns in fixed-income markets. This makes holding “non-yielding” assets like Bitcoin more expensive in terms of opportunity cost.
- Tight Monetary Policy: Although the Fed stopped shrinking its balance sheet in December 2025, interest rates remain high relative to growth expectations, keeping financial conditions restrictive.
- Historical Precedent: In previous cycles (like 2019), Bitcoin price often “rolled over” months before the traditional stock market showed signs of stress.
Without a clear pivot toward lower real yields or a more aggressive easing cycle from the Federal Reserve, the institutional “accumulation” phase for Bitcoin ETFs may remain on pause.
