A few weeks ago, Bitcoin (CRYPTO: BTC) ETFs were the bull case. The funds pulled in $3.29 billion combined in March and April, marking the first sustained inflow streak of 2026. However, the streak snapped yesterday.
U.S. spot Bitcoin ETFs bled $635 million, recording their largest outflow since late January. The reversal wasn’t a one-off as there were three key factors that triggered the exodus. Here’s our review of what’s actually driving the outflows and the catalyst that could reverse them.
BlackRock Led the $635 Million Bitcoin ETF Exit
BlackRock’s IBIT led the exit. The world’s largest Bitcoin ETF accounted for nearly half of the $635 million that walked out of the spot Bitcoin ETF funds on May 13. Per SoSoValue data, that’s the worst single-day reading in over three months.
The selling didn’t stop there either. Cumulative net inflows since the ETFs launched in January 2024 fell from $59.76 billion last week to $58.5 billion now—a $1.26 billion drop in five trading sessions.
The last time outflows looked like this was January 29, when the ETFs recorded $1.1 billion in outflows one session during Bitcoin’s winter correction. Between then and last week, outflow days averaged $340 million, and yesterday nearly doubled that.
Inflation Data Killed the June Rate-Cut Trade
Markets came into this week expecting rate cuts, but by Wednesday morning, they were pricing rate hikes. Tuesday’s April CPI came in at 3.8% year-over-year—the highest since May 2023. Then Wednesday morning, April’s PPI hit 6%, which was the biggest wholesale-price increase since December 2022.
The Iran war is the engine for the inflation spike, as gasoline alone surged 15.6% in April. Both numbers came in well above forecasts, and with the Strait of Hormuz still blocked, the inflation pressure isn’t easing soon.
Before Wednesday’s PPI report, CME FedWatch put the odds of a June rate hold at 70%, with a 28% chance of a cut. After the report, markets stopped pricing rate cuts entirely. CME hike odds on forward 2026 meetings climbed to roughly 39%—and Polymarket now puts the odds of zero rate cuts all year at 62%.
Nationwide senior economist Ben Ayers said he expects May CPI to come in above 4%. Bitcoin typically trades on rate expectations like every other risk asset, and rate-cut hopes were the bid behind Bitcoin’s spring rally. When those hopes flipped to hike fears, the trade unwound.
Hence, the fastest way for institutions to cut Bitcoin exposure is to sell ETFs, and that’s what showed up in the $635 million outflow.
Why Warsh’s Confirmation Spooked the Rate-Cut Bulls
On the same day the inflation data dropped, Kevin Warsh got confirmed as the next Fed Chair. The full breakdown of what his confirmation means for Bitcoin is in our piece from yesterday.
The short version is that Warsh has personal crypto investments—he’s the first Fed Chair to take office with disclosed crypto holdings in Bitwise, Flashnet, and Polymarket. But he’s also the most hawkish Fed Chair on monetary easing since the financial crisis. His confirmation didn’t add new information for markets, but rather locked in an institutional read that had been building for weeks.
The hot inflation data and Warsh’s confirmation hit institutions at the same moment. The combination forced the repositioning we saw in the ETFs.
Adam Haeems, head of asset management at Tesseract Group, put it bluntly to CoinDesk: “A persistently hot CPI, an incoming Fed under Warsh that markets read as more hawkish, or another oil shock can compress bitcoin even with positive net flows.”
All three forces hit at once this week and that’s what’s affecting Bitcoin funds. Warsh’s first public statement comes Friday at the swearing-in ceremony. If he leans hawkish on inflation, the institutional reweighting accelerates, but if he signals patience, the outflows could stabilize.
BTC Hit the $82K Wall — and Profit-Takers Cashed Out
Bitcoin rallied 26% from $66,000 in mid-April to $82,000 last week, then it hit a wall. The 200-day moving average—the most-watched long-term trend indicator—is at $82,455.
The Bitcoin price tested that four times in two weeks and got rejected every time. CryptoQuant called out the parallel to March 2022. Back then, Bitcoin tested the 200-day MA, failed, and fell from $47,000 to under $16,000 over the following months. Whether history repeats depends on the next two weeks of macro data.
Moreover, traders didn’t wait for the rejection to confirm, as they started selling at the top. On May 4, traders cashed out $1.16 billion in Bitcoin profits—14,600 BTC sold in a single day. That was the largest daily profit-taking haul since December 2025. The same institutions that bought the spring rally through ETF inflows had the most gains to lock in. When the 200-day rejected and inflation data came in hot, those positions hit the exit.
The Coinbase Premium—the price gap between Coinbase and Binance, which tracks US institutional demand—flipped negative at the end of April. By yesterday’s close, Bitcoin had dropped below $80,000 for the first time since early May—right as the outflows hit a 3-month high.
The CLARITY Markup Decides If the Outflows Reverse
The exit reflects what’s already happened. Today’s Senate Banking Committee markup of the CLARITY Act could decide if the outflows reverse or compound. The committee meets at 10:30 AM ET.
Senator John Kennedy, the last Republican holdout, told Semafor this week he plans to support the bill. Polymarket prices the bill’s passage odds at 73%, up from 62% after Kennedy’s commitment locked in committee passage regardless of how Democrats vote. Moreso, Citi has tied a $143,000 Bitcoin price target directly to CLARITY Act passage, projecting $15 billion in additional ETF inflows once the bill clears Congress.
That said, there are still three things to watch from here. Today’s markup vote count, Warsh’s tone at Friday’s swearing-in, and whether Bitcoin holds $80,000 on the weekly close. Flows alone won’t fix this, so Bitcoin needs the macro and regulatory conditions to give institutions a reason to come back.
Top Gaining Stocks
Top Losing Stocks