Institutional Bear Market Drains Liquidity from Bitcoin
The first institutional bear market for Bitcoin is underway, and it's unfolding differently than previous downturns. Unlike the retail-driven crash of 2018 or the series of high-profile failures in 2022, this decline is being absorbed by large financial institutions.
One key indicator of an institutional bear market is the behavior of spot exchange-traded funds (ETFs). In June, $4.21 billion flowed out of these funds over just three weeks, with the average holder's cost basis standing at around $83,000. This represents one of the largest redemption runs of 2026.
However, ETF outflows can't be directly translated into Bitcoin dumped on exchanges. Some investors sell shares to other investors, leaving the fund's holdings unchanged. When authorized participants redeem shares, the fund may pay cash or hand over BTC that the participant can hold, hedge, or sell.