Bitcoin Demand Slows: Institutional Investors and U.S. Spot ETFs Shift to Selling Mode

Bitcoin's institutional party hits a speed bump. After months of relentless accumulation, the big players are tapping the brakes—and some are hitting reverse.

The ETF Flip

U.S. spot Bitcoin ETFs, the darlings of 2024's bull run, have quietly shifted from net buyers to net sellers. The constant inflow that once propped up the market has dried up. Now, the tape shows consistent outflows, a subtle but significant pivot in sentiment from Wall Street's new crypto conduits.

Institutions Hit Pause

It's not just the ETFs. The traditional funds, family offices, and corporate treasuries that dove in headfirst are now treading water. The aggressive buying schedules have stalled. Order books show demand from large, block-trade desks has softened considerably, removing a key pillar of price support.

What's Behind the Pullback?

Analysts point to a classic cocktail of reasons: profit-taking after a strong run, macroeconomic jitters, and the simple fact that even digital gold gets heavy after you've bought tons of it. Some funds are rebalancing, others are waiting for clearer regulatory signals—or a juicier entry point.

The Ripple Effect

This isn't just a Bitcoin story. When whales stop buying, the entire crypto sea gets calmer—some would say stagnant. Volatility has dipped. Momentum has slowed. The market is searching for its next narrative, now that the easy 'ETF inflow' story has run its course. It turns out, institutions can be as fickle as any moonboy on Twitter—they just use fancier spreadsheets.

A necessary cooldown or the start of a deeper correction? The charts don't lie, but they also don't predict. One thing's clear: the era of easy institutional money is on hiatus. The market's next move will depend on who blinks first—the sellers running for the exits, or the long-term believers seeing a discount. After all, in finance, a 'strategic reallocation' is just a fancy term for 'we got spooked.'

Institutional demand contracts amid ETF sell-offs

The bitcoin institutional players who were more than welcoming to the Donald Trump administration at the start of the year have made the end of 2025 a crypto investment ghost town. 

Bitcoin’s demand boom is fading.

This cycle ran on three spot demand waves, and the latest one looks like it’s rolling over.

Since early October, demand is below trend, which can stay bearish for price. pic.twitter.com/7IWnRscD8H

— CryptoQuant.com (@cryptoquant_com) December 19, 2025

According to CryptoQuant’s analysis, US spot Bitcoin ETFs in the fourth quarter of 2025 shifted from net buyers to net sellers, shedding approximately 24,000 BTC.

The addresses holding between 100 and 1,000 BTC, which are mostly ETFs and treasury companies, have been expanding at below-trend rates. CryptoQuant’s analysts believe these conditions are very similar to the end of 2021 when it clocked an all-time high of $69K in November, then fell to almost half its price in January 2022 bear market.

Bitcoin ETFs attracted net inflows of $457 million on Thursday, the third-largest single-day inflow since early October. Previous peaks were recorded on November 11 and October 21, with inflows of $523.98 million and $477.19 million, respectively, according to SoSoValue data.

However, the month of December had witnessed redemptions of $100 million from these vehicles before the Thursday overhaul. If inflows do not accelerate in the second half of the month, we might be in for another “dark November” that featured $3.7 billion outflows. 

Derivative markets spell reduced risk appetite

CryptoQuant noted that declining funding rates could indicate a reduced willingness among traders to hold onto their long positions, which typically occurs during bear market cycles.

Coinglass says that Bitcoin and Ether’s volatility smiles are skewed toward out-of-the-money put options at all tenors. This shows that traders still want protection against losses.

Short-dated volatility may have eased from earlier extremes that pulled BTC down to $80,000. However, the overall price movement is more bearish than bullish, which could mean the market is not expecting a positive run heading into 2026.

Analyst IT Tech wrote that short-term holders of Bitcoin are sitting on average losses of -14.9%, with the crypto currently trading at $86,700 while their average cost basis is around $101,800. This, per the market watcher, has created a “pain zone,” where attempts by the market to rebound toward $101,000 could cause panic selling and profit taking.

Bitcoin’s price has also fallen below its 365-day moving average, the long-term technical support that distinguishes bull from bear markets. And as several chartists on X have insinuated, demand cycles drive Bitcoin’s four-year market behavior more than halving events do.

Despite these signals, historical bear market bottoms for Bitcoin appear on the heels of the king coin’s realized price, currently NEAR $56,000 and 55% from recent all-time highs. The crypto’s intermediate support is currently around $70,000, but if BTC drops below that threshold, investors might as well wait for a $50,000 flash alert.

The crypto market has declined about 13% year-to-date, with Bitcoin down 10% over the same period. The total market capitalization has dipped below $3 trillion, its lowest point since April. Still, some crypto enthusiasts are urging the community not to forget the years of exceptional growth the market has experienced.

“I get that this year is a drag, but consider Bitcoin was up 468% in the two years prior. That’s an annual return of 138%, eight times more than US stocks. It’s like your ice cream sundae now has 55 cherries instead of 60. You’re fine!” argued Bloomberg senior ETF analyst Eric Balchunas.

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