US spot Bitcoin exchange-traded fund (ETF) daily flows are not a reliable guide to Bitcoin's (BTC) next move, with investors tending to chase rallies and sell into slumps, according to new research from DWF Labs.

In a report published Thursday, DWF Labs found that investors pulled money from the funds during seven of the eight occasions on which Bitcoin's price fell at least 15%, while all nine rallies of that size drew net inflows. The analysis covered 694 trading days dating back to January 2024, when spot Bitcoin ETFs first launched in the United States.

“ETF flows confirm moves; they don't predict them,” DWF Labs said in the report. “The evidence points mostly to investors reacting to price, not driving it.”

For readers who follow the funds' daily flow reports as a gauge of demand, the study suggests those numbers are best treated as a record of how investors have responded to price — not as a timing signal for what comes next.

Flows Lag, Not Lead

Investors tended to put money into Bitcoin ETFs after prices rose and to withdraw it after prices fell. As a result, daily flows offered almost no clue as to whether Bitcoin would rise or fall over the following five days.

Each day's ETF flows showed a moderate relationship with Bitcoin's price changes over the five trading sessions before that day, with a correlation of 0.54. On a scale where zero indicates no relationship, the correlation for the five days that followed was just 0.03.

ETF Outflows Don't Show Who Sold

The heaviest withdrawals came during the two most recent sell-offs. Investors withdrew a net $6.9 billion between October 2025 and February 2026, followed by a further $8.2 billion during the May–June decline.

The figures do not reveal whether institutions or retail investors drove the selling, as DWF Labs did not separate the two groups in its analysis. “We don't have a clear split on the exact buyers/sellers of the ETFs,” a DWF Labs spokesperson told Cointelegraph.

Related: Institutions held crypto through 50% drawdown, Bitwise finds

Some ETF activity also stems from investors buying fund shares while betting against Bitcoin through CME futures to capture the price gap between the two positions. DWF Labs estimated that roughly a fifth of flows may have been hedged this way, although its data could not confirm that the same investors held both sides of the trades. To the extent that is the case, headline flow figures can overstate how much ETF money represents an outright directional bet on Bitcoin.

A separate CoinShares analysis published in June found that professional investors reduced their Bitcoin ETF exposure by 17% in the first quarter of 2026. Hedge funds and brokerages accounted for roughly 96% of the reduction, while banks increased their holdings.

Bitcoin's Sell-Offs Have Slowed

The report also found that Bitcoin has experienced about three sell-offs of 15% or more per year since the ETFs launched, compared with roughly four per year in 2022–2023 and eight in 2021.

The declines have also become more gradual, though the losses remain comparable: the median sell-off wiped out 21.3% of Bitcoin's value, versus 19.4% in 2022–2023.

“The changes aren't solely due to the ETF,” the spokesperson said, noting that volatility and the frequency of sell-offs were already declining before the funds launched in 2024. What the data cannot yet settle is what has driven the cooling trend, leaving both the pace of future drawdowns and the funds' role, if any, in shaping it as open questions.

This article is based on reporting by Cointelegraph.