Institutional Portfolio Rebalancing Triggers Bitcoin and Ethereum ETF Outflows

Spot Bitcoin and Ethereum ETFs experienced their steepest withdrawal period in two weeks, with combined redemptions reaching $582.4 million on a single trading day as large investors trimmed their crypto allocations. The broader market turbulence appears less driven by crypto-specific concerns and more reflective of macro portfolio adjustments across risk assets.

The Data Behind the Pullback

Bitcoin spot ETF redemptions hit $357.6 million—the largest single-day outflow since early December. This selling pressure was distributed across multiple providers including Fidelity’s FBTC, Ark’s ARKB, and Bitwise’s BITB, though BlackRock’s IBIT remained relatively stable. Ethereum spot ETFs mirrored this trend with nearly $225 million in daily withdrawals, marking the month’s most significant redemption event.

Zooming out over the full month reveals a clearer picture: Bitcoin ETFs recorded approximately $705 million in outflows against $480 million in inflows, resulting in a net drain of roughly $225 million. Ethereum ETFs demonstrated better equilibrium, with $411 million in inflows nearly offsetting $403 million in outflows, leaving the segment hovering near flat. Current Bitcoin prices sit around $93.03K (down 2.16% in 24 hours), while Ethereum trades near $3.22K (declining 2.94% in the same period).

Why the Long-Term Block Matters

What makes this pullback noteworthy is that it occurred despite crypto prices holding relatively steady within established ranges. This disconnect reveals institutional investors are using spot ETFs as a precision tool for broader portfolio rebalancing rather than reacting to asset-specific weakness.

“Bitcoin increasingly mirrors technology sector movements rather than developing independent price action,” explained an analysis of current market dynamics. When U.S. tech stocks correct, Bitcoin experiences disproportionate selling pressure. This fourth-quarter correlation suggests that redemptions track macro de-risking cycles—a pattern where institutions trim multiple risk asset classes simultaneously.

The Monetary Policy Environment

The Federal Reserve’s December 10 decision created fresh complexity: rate cuts accompanied by signals that the easing cycle may slow significantly. This mixed message, combined with fragmented views within the FOMC, has unsettled investors. Inflation remains stubborn, and financial conditions have tightened further, with 10-year Treasury yields climbing to 4.2%—their highest level since early September.

Technology stock selloffs have intensified amid renewed concerns about AI sector overvaluation, pulling alongside them any assets perceived as correlated risk exposure. November represented “the worst month of the year” for Bitcoin, while December has shown a two-block sideways pattern with intermittent growth attempts that lack sustained conviction.

Foundation for Recovery

Despite near-term headwinds, the underlying institutional framework remains solid. Long-term holder pressure—historically a major source of selling volume—has largely exhausted itself. Global liquidity is expanding via the Fed’s accommodative stance, creating favorable long-term conditions.

The “institutional foundation remains strong thanks to sustained ETF positions,” which could serve as the bedrock for eventual demand recovery. Rather than signaling capitulation, the current outflow pattern appears more consistent with temporary allocation adjustments within a longer consolidation phase. As macro uncertainty settles, the structural case for institutional crypto exposure may reassert itself.