Bitcoin's Institutional Bear Market Unfolds with $4.21B ETF Outflow
Bitcoin's price has been declining steadily since its peak in October 2025, when it reached $126,223. As of July 1, 2026, the price had dropped below $59,000, and by early August, it had recovered to around $64,000.
This decline marks what may be Bitcoin's first institutional bear market. A bear market is typically defined as a drop in price of at least 33% over a certain period, and according to Reuters, Bitcoin's price has already fallen by 33% in 2026, making it the worst start to a year for the cryptocurrency in over a decade.
One key indicator of an institutional bear market is the outflow of capital from investment products such as exchange-traded funds (ETFs). By June 3, spot Bitcoin ETFs had seen $4.21 billion of outflows across three weeks, with the average ETF holder's cost basis standing near $83,000.
While this may seem alarming, it's worth noting that not all institutional investors are selling their holdings at once. In fact, some investors sell shares to other investors, leaving the fund's holdings unchanged. When an authorized participant redeems shares, the fund may pay cash or hand over BTC that the participant can hold, hedge, or sell.
BlackRock's iShares Bitcoin Trust (IBIT) has been a notable exception to this trend. Despite holding $47.48 billion of net assets on August 4, IBIT has maintained a 0.03% median bid-ask spread, allowing investors to trade close to the value of the underlying bitcoin.
The current bear market is distinct from previous ones in that it's passing through larger institutional channels and showing no signs of forced liquidations or bankruptcy claims. This slower decline may make it feel less eventful, but the actual distress can still be seen in on-chain data, where realized capitalization has fallen 1.45% over 90 days to $1.07 trillion by June 17.
The state of the derivatives market also points to an institutional bear market. Glassnode found that the June break below $60,000 was led by spot selling while futures reacted, and open interest contracted as the price fell.