February 5, 2026

How Bitcoin ETF Inflows and Outflows Impact Price Action

How Bitcoin ETF Inflows and Outflows Impact Price Action

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the event highlighted how swiftly sentiment around Bitcoin ETFs can reverse, shifting from steady inflows to abrupt outflows within a few trading sessions. During this period, large redemptions from several spot Bitcoin funds coincided with a sharp contraction in liquidity on major exchanges, amplifying intraday volatility. Market makers, facing reduced inventory buffers and wider spreads, adjusted quotes defensively, which intensified the downside pressure as discretionary traders reacted to the visible ETF selling.

This episode also underscored the feedback loop between ETF order flow and derivatives markets. As redemptions spiked,funding rates on perpetual futures turned negative and open interest rotated toward protective put options,signaling growing demand for downside hedges. The combination of ETF-driven spot sales and increasingly cautious positioning in futures and options markets reinforced bearish price action, illustrating how a concentrated wave of ETF outflows can transmit quickly across the broader Bitcoin market structure.

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