Bitcoin ETFs Face $434M Outflow Amid Market Volatility
By John Nada·Feb 6, 2026·2 min read
Bitcoin ETFs have experienced nearly $1 billion in outflows amid market volatility, raising concerns over their impact on Bitcoin's scarcity.
Bitcoin exchange-traded funds (ETFs) have seen significant outflows, shedding nearly $1 billion in just two days. On Thursday alone, spot Bitcoin ETFs recorded $434 million in net outflows, following a staggering $545 million in redemptions the previous day, according to data from SoSoValue. Despite $561 million in inflows earlier in the week, these amounts weren't enough to counterbalance the losses, resulting in net weekly outflows of about $690 million as of Friday morning.
The withdrawals coincide with a notable dip in Bitcoin's price, which briefly reached $60,000, a level it hadn't touched since October 2024, as reported by CoinGecko. This market downturn has sparked a debate within the community regarding the catalysts behind it, with some critics targeting Bitcoin ETFs. Despite analysts highlighting the resilience of these funds, concerns persist about their actual impact on Bitcoin's market.
Critics have pointed out the phenomenon of 'paper Bitcoin'—a term used to describe how the same Bitcoin can back various financial products like ETFs and futures contracts, which may dilute its perceived scarcity. Bob Kendall, a technical analyst, expressed concerns in a recent post, stating, "That is not a market. That is a fractional reserve price system." His views resonate with earlier warnings from other analysts, including Josef Tětek, who cautioned that Bitcoin ETFs could facilitate the creation of unbacked Bitcoin, potentially undermining the value of the real asset.
As of Friday, total assets held in spot Bitcoin ETFs stood at approximately $81 billion, with cumulative net flows at $54.3 billion, according to SoSoValue. In contrast, altcoin ETFs reflected a mixed performance, with Ether (ETH) funds experiencing outflows of $80.8 million, while XRP and Solana (SOL) ETFs recorded minor inflows of $4.8 million and $2.8 million, respectively.
This situation underscores the ongoing tension between institutional adoption through ETFs and the preservation of Bitcoin's foundational principles. As the market navigates these challenges, the implications for Bitcoin's long-term value and its role in the financial ecosystem remain critical to watch.