US spot Bitcoin exchange-traded funds (ETFs) have recorded more than $1 billion in net outflows over three consecutive trading days, but crypto asset manager Bitwise says the withdrawals do not signal a lasting retreat by institutional investors.

Investors pulled another $116 million from the funds on Tuesday, bringing cumulative net outflows since Friday to $1.16 billion, according to SoSoValue data. Net flows — the difference between daily creations and redemptions — are tracked as a gauge of investor demand for Bitcoin exposure through traditional brokerage channels.

“I do think it’s related to a short-term risk-off environment rather than a structural change in institutional sentiment,” Bitwise’s head of research, André Dragosch, told Cointelegraph.

The withdrawals followed Binance’s $6.3 billion hack on Thursday, which raised concerns about investor confidence and the security of ETF custody arrangements across the industry. Dragosch attributed the outflows to weaker market sentiment rather than fears over the safety of ETF holdings.

Institutions are holding on

Dragosch said ETF flows reflect both long-term institutional adoption and shorter-term shifts in investor sentiment. He cited a recent Bitwise survey of 15 institutions, none of which had reduced their Bitcoin ETF exposure during the bear market, while United States regulatory filings also show that most institutional investor categories, apart from hedge funds, have largely maintained their positions.

Retail investors still account for the majority of Bitcoin ETF holdings and tend to react more strongly to market volatility, according to Dragosch. Bitwise’s analysis also found that ETF inflows closely track broader crypto market sentiment, which weakened in the days surrounding the Binance hack, he said.

Outflows slow as Bitcoin sentiment improves

Tuesday’s $116 million in outflows marked a slowdown from Monday’s $399 million and Friday’s $643 million, extending the funds’ withdrawal streak to a third consecutive trading session.

The Crypto Fear & Greed Index rose to 34 from 26 on Monday, though it remained in the “Fear” category. The gauge runs from 0, indicating extreme fear, to 100, indicating extreme greed. Bitcoin gained roughly 1.6% over the past 24 hours, trading near $78,000 at publication, according to CoinGecko.

The latest withdrawals brought the funds’ net outflows for 2026 to approximately $153 million. That year-to-date figure is far smaller than the recent three-day streak, reflecting the net inflows the funds recorded earlier in 2026. Daily flow data from trackers such as SoSoValue will offer the next indication of whether the slowdown continues into further trading sessions.

Binance hack raises questions about ETF custody

The Binance hack has led some industry observers to question the custody arrangements behind crypto ETFs, particularly because major funds rely on a small number of custodians. Because ETF shareholders hold fund shares rather than the underlying coins, the operational security of those custodians is central to how the products safeguard their Bitcoin reserves.

Dragosch pointed to differences between the security setups used by crypto exchanges and institutional custodians, noting that the Binance incident affected hot wallets, which are connected to the internet, rather than cold wallets.

“In contrast, institutional funds held at Coinbase custody are custodied in cold storage which, by definition, are not connected to the internet,” Dragosch said.

Source: Cointelegraph