Bitcoin ETFs Face Record Outflows as Yearly Start Turns Grim
By John Nada·Feb 20, 2026·6 min read
US-listed Bitcoin ETFs are experiencing significant outflows, marking one of the worst starts to the year for the cryptocurrency. The implications for market sentiment and institutional strategies are profound.
Selling pressure in US-listed spot Bitcoin ETFs continued Thursday, with analysts noting the cryptocurrency is on track for one of its worst yearly starts. Spot Bitcoin (BTC) ETFs saw $165.8 million in outflows Thursday, bringing weekly losses to $403.9 million, according to SoSoValue data. The redemptions moved the funds closer to a possible five-week outflow streak, with year-to-date (YTD) losses totaling $2.7 billion. This alarming trend raises questions about the sustainability of Bitcoin's position in the market, especially as institutional interest appears to wane.
Trading activity continued to shrink, falling 21% over the week and reaching its lowest levels since late December, signaling weakening investor activity. This decline in trading volume is particularly concerning, as it suggests that confidence in Bitcoin's recovery is dwindling. As trading volumes decrease, the overall liquidity in the market is affected, making it increasingly difficult for investors to execute trades without impacting the price significantly.
Despite $53.9 billion in cumulative net inflows, analysts, including DropsTab, noted that 2026 is shaping up to be “one of the worst yearly starts in Bitcoin’s history,” with BTC prices down about 22% year-to-date, according to TradingView data. The disparity between historical inflows and current outflows illustrates the volatility and unpredictability that has come to characterize the cryptocurrency market. Investors who once flocked to Bitcoin ETFs are now reconsidering their strategies, as they navigate a landscape rife with uncertainty.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) accounted for the bulk of outflows this week, totaling $368 million, according to Farside data. Other US-listed spot Bitcoin ETFs saw little or no activity this week, aside from about $50 million in outflows from the Fidelity Wise Origin Bitcoin Fund (FBTC) on Wednesday. The dominance of BlackRock's IBIT in this downturn underscores the impact of larger institutional players on the market and raises concerns about the sustainability of Bitcoin's value as these entities reassess their exposure to digital assets.
Some major financial institutions reported reducing IBIT exposure earlier this week, with Brevan Howard cutting its holding in the fund by as much as 85% in the fourth quarter of 2025. This drastic reduction signals a profound shift in institutional sentiment, as major players begin to withdraw from a market that many once considered a cornerstone of their portfolios. Such moves by institutions, which typically signal confidence or lack thereof in an asset, are likely to have downstream effects on retail investors who may follow suit in light of the changing sentiment.
The ongoing outflows from Bitcoin ETFs coincide with weakening investor sentiment, as multiple sources point to unusually low BTC price levels compared to previous cycles. Drops Analytics highlighted Bitcoin’s price in the context of halving — an event that reduces BTC’s block reward once every four years and is typically followed by price surges in the years that follow. “Almost two years later, BTC trades around $66,000 — nearly the same level as during the April 2024 halving,” Drops Analytics said in a Telegram post on Thursday. This stagnation raises alarms, as previous cycles saw Bitcoin trading multiples higher than halving levels by this point.
“This has never happened before. In previous cycles, BTC was already three to 10 times above halving levels by now,” it added. The current state of the market challenges the narrative that Bitcoin is a reliable hedge against inflation and economic instability, as the prevailing downward trend contradicts the historical price behavior following halving events. Investors may begin to question the fundamentals that have underpinned Bitcoin's growth, prompting further caution in their investment strategies.
According to Checkonchain data, Bitcoin is off to its worst yearly start on record, 50 days into 2026, surpassing previous down years, including 2018. The implications for the broader financial system are significant, as Bitcoin's struggles could influence perceptions of other cryptocurrencies and the entire digital asset ecosystem. As Bitcoin has often been viewed as a bellwether for the cryptocurrency market, its performance can have a cascading effect on altcoins and other blockchain projects that rely on Bitcoin’s price action for momentum.
The confluence of declining ETF inflows and reduced trading activity suggests an urgent need for market participants to reassess their strategies in this evolving landscape. Investors and regulators alike must consider the potential long-term impacts of this trend as the crypto market continues to mature. As institutions reevaluate their positions, retail investors also face the challenge of navigating a market that is increasingly susceptible to external factors such as regulatory changes, macroeconomic shifts, and technological advancements.
The current bearish sentiment surrounding Bitcoin ETFs sheds light on a critical juncture for the cryptocurrency. The ongoing outflows and the significant decline in trading volume highlight a potential crisis of confidence that could have far-reaching implications for the future of Bitcoin and other digital assets. As analysts and investors grapple with these developments, the market will need to find a path to recovery that reassures both retail and institutional participants.
With the market dynamics shifting, it is essential for investors to stay informed and adaptable. The volatility and uncertainty that currently characterize the cryptocurrency landscape may present new opportunities for astute investors who can identify value amidst the chaos. However, the prevailing sentiment suggests caution, as the fallout from recent trends continues to unfold.
As we move further into 2026, the need for robust regulatory frameworks and clearer guidelines surrounding cryptocurrency investments becomes increasingly apparent. As governments and regulatory bodies around the world seek to establish a more stable environment for digital assets, the actions taken will likely shape the trajectory of Bitcoin and its associated products. The establishment of a clear regulatory landscape could provide the certainty that investors crave, potentially restoring confidence in Bitcoin ETFs and igniting renewed interest in the cryptocurrency market.
In the meantime, market participants must remain vigilant and responsive to the shifting tides of investor sentiment and macroeconomic conditions. The path forward for Bitcoin ETFs remains fraught with challenges, yet the potential for recovery exists if stakeholders can navigate the complexities of this rapidly evolving market. The coming months are likely to be critical in determining whether Bitcoin can regain its footing or if it will continue on its downward trajectory, impacting not just the cryptocurrency market but also the broader financial landscape.
As this situation develops, it will be crucial for investors to closely monitor trading patterns, institutional movements, and regulatory changes. By doing so, they can better position themselves to take advantage of potential rebounds or mitigate losses in what remains a highly speculative and unpredictable market.