For the first time since their inception, US spot Bitcoin ETFs have recorded a consecutive 10-day outflow streak. Between May 15 and May 29, the investment vehicles experienced net liquidations totaling $2.96 billion. The capital flight was highly concentrated in BlackRock’s iShares Bitcoin Trust (IBIT), which accounted for $2.11 billion of the total withdrawals over the ten-day period, followed by redemptions from Fidelity’s FBTC.
While the majority of established asset managers observed completely flat or zero net flows during this window, Morgan Stanley’s newly launched MSTB bucked the trend by logging $5.4 million in outflows. Industry analysts note that these fluctuations align with historical retail behavior, where retail-driven client bases tend to enter at local market tops and liquidate assets during local bottoms.
Institutional Liquidations Impact Spot Prices
The persistent capital drain heavily impacted underlying crypto spot prices. During this redemption window, Bitcoin’s market price dropped from a peak of $80,000 down to a local low of $73,000, before stabilizing slightly around $73,807.36 at the time of writing.
This capital contraction was not isolated to Bitcoin. Spot Ethereum (ETH) ETFs concurrently charted a three-week outflow streak of their own, pulling the spot price of ETH down from $2,300 to $2,019.07. The synchronization between fund redemptions and spot depreciation indicates that structural ETF withdrawals have been a primary driver of the immediate downward price trends.
Rising Funding Rates Signal Leverage Risks
Despite the visible contraction in spot demand, derivatives market participants are displaying strong bullish bias. Data from CoinGlass reveals that the Open Interest (OI)-Weighted Funding Rate for Bitcoin has continued to rise, remaining firmly positive. This indicates that a significant majority of leveraged market participants are actively opening long positions and paying funding fees to short sellers.
This diverging dynamic, where traders aggressively build long exposure during a steady price decline, presents systemic risks. If spot buyers fail to step in and drive Bitcoin back above recent overhead resistance levels, this technical weakness is highly likely to trigger an aggressive long squeeze, amplifying downward volatility as over-leveraged long positions face cascading liquidations.
