Spot Bitcoin ETF Demand Will Decline in 2026: Why
As Bitcoin (BTC) nears its fifth negative monthly close in February, spot bitcoin exchange-traded funds (ETFs) are on track to post a fourth consecutive month of net inflows. The decline is reflected in shrinking fund balances and tepid rolling net inflow data, particularly when measured against competing asset ETFs.
With Bitcoin prices and spot ETF holdings declining since October, investors are looking for answers to what the future holds for BTC.
Bitcoin ETFs dominate the headlines.
Net assets held by U.S. spot Bitcoin ETFs peaked at nearly $170 billion in October 2025 and currently stand at $84.3 billion. Accumulated net income fell to about $54 billion from $63 billion. Cumulative net inflows since July 2025 have totaled only $5 billion, highlighting the sharp decline in capital flows.
Bitcoin researcher Axel Adler Jr. tracked the seven sessions between February 12 and February 19 and found net ETF outflows totaled 11,042 BTC. February 12 saw the biggest one-day drop at 6,120 BTC, or about $416 million. The February 17 and February 18 sessions saw back-to-back flows of 1,520 and 1,980 BTC respectively. Only two sessions were positive, in the February 6 session 5,900 BTC was added to funds.
Adler says three consecutive positive sessions are needed to justify a renewed stock in ETFs. Until then, the flows will continue to be a source of market supply.
The macroeconomic data is consistent with the cooling trend. ETFs have lost about 87,000 BTC since November 2025, including roughly 15,000 BTC in February. Total ETF balances are now down to 1.26 million BTC from a peak of 1.36 million BTC.
Measured selling pressure from large BTC funds. BlackRock's IBIT holdings fell from 806,000 BTC to 759,000 BTC, a 6% decrease. Fidelity's FBTC dropped from 213,000 BTC to 186,000 BTC, a decrease of 12.6%.
Bitcoin prices have fallen far more than ETF balances, with spot market demand seemingly insufficient to fully absorb the broader market pressure.
Gold steals the spotlight from BTC ETFs
Over the past two years, Bitcoin and gold ETFs have switched leads based on 90-day rolling flows. Bitcoin's 90-day revenue peaked at around $16 billion in March 2024, fell to $3 to $4 billion between June and October, and then peaked at $21.6 billion in December 2024.
Gold EFs have taken a different approach. The flows remained negative until July 2024, then increased to $30 billion in April 2025. Between March and April 2025, Bitcoin's 90-day flows dropped to negative $2 billion.
Gold rose again to $36 billion in October 2025, while Bitcoin earnings faded in the last quarter. In the year In January 2026, gold flows reached $29 billion before slowing to $21 billion in mid-February.
The data shows frequent hand-holding between the two properties. Especially between March and October 2025, periods of weakening demand for Bitcoin ETFs coincide with rising gold prices.
In contrast, gold ETFs hold more capital as investors gravitate toward the asset with a longer track record of lower valuations and risk-off levels.
Related: Bitcoin ETFs Pour $166M into BTC for Worst Start in Years
“Limited Digestion” Hits Bitcoin Demand.
ITC Crypto founder Benjamin Cowen classifies the first quarter of 2026 as a “late-cycle limiting digest” for equities and crypto markets.
The US Federal Reserve ended rate tightening in December 2025, halting balance sheet outflows, but monetary policy remains restrictive relative to market growth expectations. The federal funds rate is still sitting above the 2-year Treasury yield, the 10-year yield is trading at 4.1% and the 10-year real yield is 1.7%-1.8%, keeping financial conditions tight.
The positive real yield means investors can earn inflation-adjusted income in fixed income markets, increasing the opportunity to hold volatile assets like Bitcoin.
Cowen noted that in previous tightening cycles, Bitcoin prices weakened before equities stressed. In the year In 2019, the price of BTC rolled in the months ahead of the broader weakness in equities.
Historically, sustainable ETF returns have followed falling real yields or an outright dilution cycle. Neither scenario has yet developed, which may explain the slowdown in demand for Bitcoin ETFs since October 2025.
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