The cryptocurrency market is feeling the heat as Bitcoin exchange-traded funds (ETFs) record their fourth consecutive week of outflows, reflecting a wave of investor uncertainty amid growing macroeconomic challenges. According to data from So Value, Bitcoin ETFs saw nearly $800 million in withdrawals between March 3-5, following a record-breaking outflow of $2.61 billion in the previous week. The trend extends a month-long decline, with total net outflows surpassing $4.5 billion.

The sell-off has been consistent, with daily net negative flows throughout last week:

• Monday: $74.19 million outflow
• Tuesday: $143.43 million outflow
• Wednesday: $38.3 million outflow
• Thursday: $134.26 million outflow
• Friday: The largest outflow of $409 million

Among the biggest losers on Friday, ARK and 21Shares’ ARKB led the pack with $160.03 million in withdrawals, closely followed by Fidelity’s FBTC, which saw $154.89 million exit. Other major ETFs, including BlackRock’s IBIT, Grayscale’s GBTC, and Bitwise’s BITB, also recorded notable outflows of $39.85 million, $36.46 million, and $18.6 million, respectively.

The only exception to this trend was VanEck’s HODL ETF, which saw a modest inflow of $619,550, barely making a dent in the market-wide retreat.

Macroeconomic Pressures and Trump’s Trade Tariffs Weigh on Sentiment

The sustained ETF outflows come at a time of growing macroeconomic uncertainty. Analysts attribute the decline to a mix of factors, including President Donald Trump’s trade tariffs, slowing consumer spending, and inflation fears—all of which have contributed to a cautious investment environment.

Hopes were high that last week’s White House Crypto Summit would provide a bullish catalyst for Bitcoin, but instead, the market saw a continued sell-off. Even Trump’s declaration of the Strategic Bitcoin Reserve, meant to boost U.S. holdings of digital assets, failed to stop the decline.

Kadan Stadelmann, CTO of Komodo, explained that Bitcoin’s drop is a classic case of “buy the rumor, sell the news.” Speculation about the Strategic Bitcoin Reserve had been brewing since July 2024, when Trump first hinted at the initiative. By the time the executive order was signed last Thursday, the market had already priced in the news, leading to a sell-off instead of the anticipated rally.

Stadelmann noted that people who are less informed, connected, and monied often buy the news and lose money. He suggested that institutional investors had already positioned themselves ahead of the declaration , leaving retail traders exposed to losses.

Hedge Funds and Arbitrage Trading: A Hidden Cause of Outflows?

Another major factor driving the decline is the unwinding of arbitrage trades by hedge funds.

Many institutional investors have been profiting from low-risk arbitrage opportunities between spot Bitcoin ETFs and CME Bitcoin futures. As these trades unwind, liquidity drains from the market, leading to increased selling pressure.

With billions flowing out of ETFs, the market is experiencing a temporary liquidity crunch, exacerbating Bitcoin’s recent price swings.

Ethereum ETFs Also Hit by Selling Pressure

Bitcoin isn’t the only asset facing trouble. The nine spot Ethereum ETFs have also suffered two straight weeks of negative flows, with $455 million in investor withdrawals. This suggests that the broader crypto market is undergoing a period of widespread risk-off sentiment, as traders brace for more macroeconomic uncertainty.

What’s Next for Bitcoin and Crypto ETFs?

While Bitcoin ETFs are currently seeing heavy outflows, some analysts believe this could be a short-term correction rather than a long-term trend.

Bitcoin has recently traded between $80,000 and $92,000, showing signs of resilience despite the sell-offs. Some experts argue that once macroeconomic fears subside, institutional investors could return to the market, bringing renewed demand for Bitcoin ETFs.

However, for now, investors remain cautious, watching for signals from the Federal Reserve, new economic data, and further developments in Trump’s crypto policies.

The coming weeks will be critical in determining whether Bitcoin can reverse its downward trajectory or whether ETF outflows will continue to weigh on the market.