Turbulent times for Bitcoin as ETF outflows continue in March

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Bitcoin ETFs experienced net withdrawals on most trading days this month. March opened with continuous outflows, extending a downturn that began in late February.

Between March 3 and March 7, every single day saw net outflows — roughly $74 million on March 3, $143 million on March 4, $38 million on March 5, $134 million on March 6, and around $409 million on March 7. The Friday outflow was the largest single-day redemption of the month, capping off a week that totaled nearly $800 million withdrawn between March 3 and March 5 and over $2.6 billion in the week before.

There was a brief mid-week respite around March 5 (with nearly flat flows), but overall, the trend was decisively negative, with investors consistently pulling capital from Bitcoin ETF products. Even as the second week of March began, the wave of redemptions continued – for example, March 10 and March 11 each saw between $350 million to $370 million in net outflows. Only very minor inflows, if any, punctuated this period, making March one of the most withdrawal-heavy months since Bitcoin ETFs launched in January 2024.

March continued the trend of net outflows from spot Bitcoin ETFs, reflecting a clear reversal from the strong inflows seen at the beginning of the year. Data from CoinShares showed this multi-week stretch of outflows totaled on the order of $4.5 billion to $4.8 billion, leaving digital asset investment products. Investors who had been steadily allocating to Bitcoin ETFs up through January suddenly turned into net sellers by late February and remained so through March.

A notable turning point occurred in mid-February: after an unprecedented streak of inflows (post-US elections) that amassed roughly $29.4 billion, the market saw its first significant weekly outflow of around $415 million in the week of Feb. 17. That inflection set the stage for March’s persistent withdrawals.

Unlike the earlier part of the year, where inflows were the norm, March’s flow pattern was mostly one-way (out). There were no major sustained inflow days during the month — the only “relief” came on isolated days when outflows temporarily slowed or briefly flipped positive. For instance, at the very end of February (Feb. 28), a one-day inflow of about $370 million broke an eight-day outflow streak, and early March saw a single modest inflow day (or essentially flat flows mid-week). However, these proved fleeting. By the next trading session, outflows resumed and, in some cases, accelerated.

This “two steps back, one step forward” pattern indicates that bearishness is prevailing: any small inflows were overwhelmed by subsequent larger redemptions. The peak outflow days in March — notably March 7, March 10, and March 11 — stand out as capitulation-like events where selling pressure surged. March 7’s roughly $409M outflow was especially striking, and the outflows on March 10 and March 11 were only slightly smaller (each around $367 million net). These peaks suggest multiple large institutions were withdrawing funds at the same time.

One observable pattern was that outflows built momentum through each week, often peaking toward the end of the week. For example, net withdrawals snowballed from Monday into Friday during the first week of March. A similar phenomenon appeared in the second week, culminating in the massive March 10 and March 11 outflows. This could indicate that as negative news accumulated or Bitcoin’s price fell (triggering stops or risk controls), more investors joined the exodus as the week progressed. The lack of consistent inflows also indicates weak dip-buying by institutions via ETFs during this period — a contrast to prior months where pullbacks often attracted fresh allocations.

The volatile ETF flows followed a roller-coaster in Bitcoin’s price. Early in the month, Bitcoin rallied to around the mid-$90,000s (briefly reaching roughly $94,000 to 95,000 in the first days of March) before sharply reversing course. By mid-March, amid the heaviest outflows, the price had plunged approximately 15% to 20% from its peak — dropping to the low $80,000s and even briefly below at one point. This period included some of the largest daily price swings of the year.

For example, on March 7, when Trump’s executive order news spooked the market, Bitcoin’s spot price dropped over 2% that day after falling as much as 5% intraday, mirroring the surge in ETF redemptions. It’s a similar story on other significant outflow days: March 3 and March 4 saw Bitcoin slide from around $94,000 down to $80,000 and the massive outflows on March 10 coincided with Bitcoin hitting four-month lows around $77000 to $78000 before bouncing back.

Large Bitcoin ETF outflows can directly translate into selling pressure on the underlying asset. When investors redeem shares, the ETFs need to sell Bitcoin to raise cash, increasing supply in the market. This mechanism likely exacerbated the price declines during March. The data shows a feedback loop between ETF flows and price volatility. As prices fell quickly in early March, some institutional holders may have been spooked into withdrawing funds (to cut losses or de-risk), forcing additional Bitcoin selling by the funds and potentially driving prices down further.

This cycle of falling prices and accelerating outflows is characteristic of a short-term capitulation phase. The result was unusually turbulent price action: Bitcoin’s trading range for March was wide (roughly $80,000 to $92,000 in the latter part of the month), with rapid swings that coincided with the ebb and flow of ETF investment. By contrast, when outflows finally started easing toward the end of the month, Bitcoin’s price began stabilizing and recovering.

The pattern of ETF flows we’ve seen in March reflects a significant shift in institutional investor sentiment. A major overhang was the Federal Reserve’s policy outlook. In mid-February, Fed Chair Jerome Powell signaled a more hawkish stance, and US inflation data came in hotter than expected. Being highly sensitive to interest rate expectations, Bitcoin reacted negatively — institutions pulled money out when they realized rates might stay higher for longer. These hawkish signals “prompted” the initial wave of outflows, breaking the long inflow streak.

By March, the prospect of continued tight monetary policy (and the lack of an immediate Fed pivot to easing) kept institutional investors on the defensive. Fears that higher interest rates would strengthen the dollar and dampen appetite for alternative assets made Bitcoin ETFs less attractive in the short term.

March also brought noteworthy US policy news that influenced sentiment. Early in the month, anticipation built around a rumored US “Strategic Bitcoin Reserve.” However, when Trump signed an executive order on Mar. 6 establishing the reserve, it disappointed traders by not mandating any immediate Bitcoin purchases. The announcement was nuanced — it created a framework for a national Bitcoin reserve (mainly using seized assets and instructing budget-neutral acquisition strategies).

However, it did not unleash new government buying of Bitcoin. This fell short of market hopes and exemplified a “buy the rumor, sell the news” scenario: many investors had likely bid up Bitcoin in expectation of bullish government action, only to sell when the actual policy was less impactful. The day after the executive order, March 7, saw a massive outflow from ETFs of over $370 million and a significant fall in price driven by the market’s disappointment.

In addition, Trump’s broader economic policies played a role. The administration’s renewed trade tariffs and tough talk on trade introduced worries about global growth. Such geopolitical tensions and protectionist measures tend to make large investors more risk-averse. Alongside this, the White House Crypto Summit had raised hopes for supportive signals but ultimately provided no bullish catalyst, doing little to stem the sell-off.

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