Who is actually selling?

Written by: Blockchain Knight

In the past six weeks, the net outflow of U.S. spot Bitcoin ETFs has reached approximately 6 billion dollars, marking the longest consecutive weekly loss since the product's inception in 2024.

Among these, BlackRock's largest fund, IBIT, has become a heavy-hit area, with a loss of 1.3 billion dollars in just the most recent week, accounting for over 70% of the outflows in the industry that week.

What was once the smoothest entry channel for institutions has now turned into the main exit channel.

So, who is actually selling?

On-chain data shows that long-term holders who have held Bitcoin for more than 155 days remain steadfast, still controlling about 83% of the circulating supply, with nearly all sell-offs coming from allocation funds that bought ETFs through brokerage accounts.

These individuals initially came for the regulated and lower-threshold narrative, but have now also chosen to exit for the same convenience, resulting in the first significant collective capitulation of Bitcoin since its recognition by Wall Street.

The nature of the sell-off resembles a rebalancing to reduce risk, rather than a wholesale rejection of the asset.

With inflation rising, core PCE rebounding to 4.1%, the Federal Reserve turning hawkish with increased interest rate probabilities, and AI infrastructure attracting 700 billion dollars over the year, alongside popular IPOs like SpaceX diverting funds, a significant shift of speculative funds is occurring.

Thus, when the trading desk reduces positions with one click, Bitcoin is treated as a high beta risk asset, suffering the most severe cuts first.

Realized losses have soared 78% quarter-on-quarter, with most sellers' costs concentrated between 55,000 - 68,000 dollars, stopping losses near the lower end of this range, reflecting typical capitulation behavior.

However, there are signs that the outflow rate is slowing down, from 1.72 billion dollars in the first week of June to 226.8 million by mid-month, a decrease of nearly 90%, suggesting that panic selling may have gradually exhausted itself.

However, the systemic issue of the largest ETF becoming a source of selling pressure has not disappeared. The scale of IBIT is so large that its outflows themselves are a source of pressure. On the day when the entire market saw outflows of 444.5 million dollars, all of that money came from IBIT.

When this channel, which has continuously reinforced institutional demand narratives, continues to redeem, the spot market must support itself without it, and the current trading volume and new fund inflows are particularly tepid.

Although long-term holders remain inactive, there is also no new demand entering, and prices naturally cannot be supported.

Spot volume shrinking, on-chain activity cooling, ETF buying lethargic, and new funds drying up is not a significant supply issue but a disappearance of buyers. Therefore, when options expire and macro headwinds arise, every rebound faces new tests of ETF sell-offs.

Perhaps the next few trading days will provide direction. If the outflow from IBIT slows down and Bitcoin can retake the 60,000 dollar mark, this withdrawal can be seen as a chip reset, with the market still able to recover after the turbulence.

However, if IBIT experiences significant redemptions again and the price fails to hold 58,000, then the selling pressure will not merely be a short-term position shift but a fact of departure, meaning non-ETF spot buyers must independently absorb the selling pressure from institutions exiting, which will rewrite the narrative.

Although the launch of ETFs was a major positive for the industry back then, looking at it now, regulated channels can lower entry thresholds but have never eliminated volatility. For most people, the bottom line for institutions is far from the high we imagine.