Bitcoin Spot ETFs See Massive Drawdown, But Here’s Why a Bull Run Might Be Brewing

Bitcoin has now been seeing a consistent price increase, indicating a resumption in upward momentum. So far, the asset has regained some of its losses from its recent period of correction, with its price now trading above $87,000, closing in on the $90,000 psychological level.

At the time of writing, BTC trades at $87,361, surging a 3.4% in the past day. Interestingly, despite the positive price movement, underlying activity in the broader Bitcoin market presents a more complex narrative.

While spot price action appears relatively stable, significant outflows have been recorded from Bitcoin spot exchange-traded funds (ETFs), suggesting that institutional flows may not be aligning with the current rally.

This contrast has led analysts to examine market dynamics beyond just price, particularly through the lens of on-chain behavior and historical patterns.

Bitcoin Spot ETF Outflows Reach Record Levels Amid Steady Price Action

Recent analysis from CryptoQuant contributor Darkfost highlights an ongoing trend of capital outflows from spot Bitcoin ETFs. According to the data, over $4.8 billion has exited these products since they reached their cumulative inflow peak.

Notably, this marks the largest drawdown since the ETFs were launched, signaling a shift in institutional behavior. However, Bitcoin’s price has shown limited sensitivity to this decline in ETF holdings, maintaining relative stability despite what might otherwise be interpreted as bearish pressure.

Darkfost contextualized this by noting that ETF volumes currently represent around 1.5% of the total aggregated trading volume when factoring in both spot and futures markets.

This suggests that although the ETF outflows are numerically significant, their overall impact on market structure may be limited due to the broader scale of liquidity available through other instruments.

The data imply that short-term fluctuations in ETF holdings may not directly dictate market direction, particularly in periods of strong retail or futures-driven participation.

Historical On-Chain Indicators Suggest a Potential Cycle Repeat

Another CryptoQuant analyst, BilalHuseynov, examined long-term on-chain indicators and noted similarities between the current cycle and previous market phases.

Drawing comparisons between 2018 and 2025, the analyst highlighted how Bitcoin’s recent price movement mirrors the behavior observed at the end of the 2018 bear market.

According to the analysis, historical patterns suggest a potential turning point, where bearish sentiment transitions into a longer-term bullish trend. BilalHuseynov wrote:

After an extended period in the red zone, Bitcoin is once again approaching a key threshold. The structure of the recovery and sentiment indicators appears aligned with those seen in previous transitions from downturn to uptrend.

While the analyst acknowledged that macroeconomic variables and market sentiment can still alter the outcome, the pattern recognition suggests that historical precedent could offer insight into the present market state.

Featured image created with DALL-E, Chart from TradingView