Bitcoin ETF Massive "Bleeding": How to Face the "Crisis of Faith" in 2026?

February 5, 2026, marks a milestone in the Bitcoin market. After a year, BTC once again fell below the psychological threshold of $70,000, with the price briefly dropping to around $69,100, hitting a new low since November 2024.

More notably, the spot Bitcoin ETF, which was a key pillar of last year’s bull market, has experienced net outflows for 12 consecutive trading days, totaling up to $2.9 billion. This is not just a numerical change; it reflects a complex resonance of market narratives, investor confidence, and macroeconomic environment. This article will analyze the underlying logic behind this decline from three dimensions: capital flows, market sentiment, and technical charts, and explore key future turning points.

Core Narrative Disintegration: ETF Capital “Blood Loss” Triggers Chain Reaction

In recent months, the Bitcoin spot ETF has undergone a dramatic shift from a “money magnet” to a “capital bleeding point.” Data shows that over the 12 consecutive trading days ending February 5, the net outflow of funds from U.S.-listed Bitcoin ETFs has reached $2.9 billion. This trend began around November 2025, with total outflows approaching $5.9 billion.

• Impact Analysis: An average daily net outflow of about $243 million indicates that institutional investors are systematically and continuously reducing their Bitcoin exposure. This contrasts sharply with the hundreds of billions of dollars of buying interest seen when the ETF was first launched last year. Citigroup analysts point out that the drying up of this vital new source of funds coincides with long-term holders beginning to worry about Bitcoin’s cyclical weakness, creating a double blow.
• Market Linkage: The recent decline has synchronized with the tech stock market. Weak guidance from AMD dragged down the Nasdaq index, and Bitcoin has shown a high correlation with it. Its role as a “high-volatility risk asset” has been reinforced, while the market’s “digital gold” safe-haven narrative has temporarily failed. This indicates that when macro risk appetite sharply declines, Bitcoin does not remain immune but is instead sold off along with tech stocks.

Market Sentiment Probe: From “Fear” to “Extreme Fear”

Market sentiment indicators vividly depict investor panic. The “Crypto Fear and Greed Index” currently sits in the “Extreme Fear” zone. This sentiment is directly reflected in the derivatives market.

• Professional Traders’ Pessimistic Expectations: The 30-day Delta skewness indicator in Bitcoin options is a key signal. Recently, it surged to 13%, well above the neutral threshold of 6%. This suggests that professional traders are paying high premiums to buy puts as a hedge against downside risk, indicating they do not consider $72,100 a reliable bottom and are even preparing for deeper declines.
• Leverage Systematically Cleared: Sharp price swings have triggered large-scale forced liquidations. Since Bitcoin was halted at $98,000 on January 14 and then declined, it has fallen a total of 26% over the past three weeks, triggering $3.25 billion in leveraged long futures liquidations. Analysts note that leverage positions exceeding 4x have been essentially wiped out. Although this painful deleveraging process has intensified selling pressure in the short term, it also reduces overall market fragility.

Technical Analysis and Key Levels: Searching for the Last Defense

From a technical perspective, Bitcoin’s chart has broken through multiple key support levels, forming clear bearish patterns.

• Key Support and Resistance:
  • Current Support: $70,000 has become an important psychological and technical threshold. Further below, the 200-week exponential moving average (EMA), long regarded as Bitcoin’s bull market lifeline, is currently around $68,400. This is the last line of defense that bulls must hold.
  • Major Resistance: Any effective rebound needs to first reclaim $75,000 and $83,600 (former support turned resistance) to negate the current bearish trend.
• Bearish Pattern Confirmation: On the daily chart, a “double bottom” bearish pattern known as an “inverted cup and handle” has been confirmed. Meanwhile, a “Three Black Crows” candlestick pattern may appear on the weekly chart, indicating medium-term weakness. Although the Relative Strength Index (RSI) has entered oversold territory, it is risky to bottom-fish solely based on oversold signals before clear divergence appears.

Future Outlook: What Signals Are Needed to Bottom?

The current market weakness results from multiple factors resonating together, and recovery requires several conditions to align. Gate Research Institute suggests that market participants can look for the following signals to judge whether a trend reversal might occur:

1. ETF Capital Flow Reversal: This is the most direct catalyst. If ETF outflows significantly slow or turn into net inflows, it will greatly boost market confidence.
2. Deleveraging Completion: Monitoring open interest in futures and financing rates, sustained low levels indicate that leverage has been reduced to healthy levels.
3. Macro Environment Stabilization: A rebound in tech stocks (especially AI-related sectors) will ease the correlated selling pressure on Bitcoin.
4. Defense of Key Technical Levels: Successfully holding $70,000, especially forming a strong rebound above the 200-week EMA near $68,400, will be a crucial technical bottoming signal.

Conclusion

The recent sharp decline in Bitcoin in early 2026 reflects a confluence of declining capital flows, macro risks, and deteriorating technical structures. The outflow of nearly $3 billion from ETFs has shaken the foundation of the bull market, and its high correlation with tech stocks exposes Bitcoin’s vulnerability amid global market turbulence. Although the short-term outlook is challenging, historical experience shows that large-scale deleveraging and extreme market fear often occur during the formation of long-term bottoms.

For investors, closely monitoring the aforementioned capital flows, sentiment indicators, and key technical levels is more important than precisely predicting the bottom. Markets are always born from despair, and understanding the complexities of the current cycle is the first step toward making rational decisions.