The "Breathless" Phenomenon of ETFs: Institutional Investors Pulling Out of the Crypto Market

The cryptocurrency market is experiencing a concerning “stagnation” phase – a situation where buying capacity significantly declines, indicating a fundamental shift in the behavior of large investors. After months of strong growth from the beginning of 2025, the crypto market is now witnessing a wave of capital withdrawal from (Spot ETF) funds in the US since early November. This marks a shift from FOMO sentiment to capital preservation trends, accompanied by unpredictable volatility.

What Is the “Stagnation” Phenomenon and Its Impact

The concept of “stagnation” in the financial context refers to a situation where the growth momentum of a market or asset begins to weaken, losing its initial appeal. For the crypto market, this is most evident through capital flows from ETFs – one of the most stable and reliable sources of funding over the past year.

According to the latest on-chain data, the 30-day average of net capital flow into Bitcoin and Ethereum ETFs in the US has turned negative. This is not just a temporary effect over a few trading sessions but a continuous withdrawal trend, reflecting a structural change in risk appetite among financial players.

When Capital “Stagnates”: Bitcoin and Ethereum Face Challenges

Bitcoin: Losing Momentum at Psychological Levels

Currently, Bitcoin trades around $90,700, down from the previously expected $100K milestone. After a brief rebound to $92,000–$93,000, prices quickly reversed due to insufficient buying volume. The narrow trading range of $85,000–$89,000 in recent weeks indicates a lack of strong momentum to break resistance levels.

The issue lies in the fact that, as ETFs – once the main “support” of the market – begin to “stagnate,” it effectively removes a large-scale buying force. Bitcoin can no longer rely on institutional buying pressure and must seek support from retail investors, who typically have lower risk appetites.

Ethereum: Deadlock Under Selling Pressure

Ethereum’s situation is even worse, currently trading around $3,100 after reaching $3,500 USD in early November. Rebounds to the $3,300 zone have been unsustainable, showing difficulty in gathering enough buying strength. The “stagnation” sentiment becomes more evident as investors, who previously were willing to take high risks, now prioritize capital preservation, putting ETH on the defensive.

Widespread Weakening: The Crypto Market in Accumulation Phase

The “stagnation” phenomenon is not limited to the two giants. The entire market is under intense selling pressure.

Global Market Cap Declines Significantly

The total crypto market cap is around $2.96 trillion USD, sharply down from $3.7 trillion USD in early November – nearly $740 trillion USD wiped out in less than two months. From mid-November to now, the market cap mainly fluctuates between $2.9–$3.2 trillion USD with no clear signs of recovery.

Altcoins Enter “Stagnation” Mode

The CMC20 index is currently at 184 points, down over 30% from October’s peak, indicating that the correction has spread to large-cap altcoins. Capital flows are consolidating into Bitcoin – characteristic of a risk-off phase, as investors shift towards capital preservation rather than seeking high returns.

Underlying Causes of the “Stagnation” Phenomenon

It is no coincidence that ETF capital flows are declining. There is a certain lag in ETF reactions compared to the spot market. When the spot market started trending downward from mid-October, psychological pressure gradually influenced ETF allocation decisions, leading to prolonged net outflows.

Additionally, macroeconomic conditions remain uncertain, with institutional investors waiting for positive signals from monetary policy or macro events before deciding whether to re-enter the market. Until then, “stagnation” will continue to dominate.

What Lies Ahead: The Market Needs a New Catalyst

With technical indicators and sentiment not signaling a clear reversal, the most likely short-term scenario is that the market will continue to fluctuate within a narrow range, absorbing remaining selling pressure. This phase requires investors to exercise patience and discipline.

The market needs new macro catalysts – such as changes in interest rate policies, positive economic data, or a decisive return of institutional capital – to break the current deadlock. Until then, careful observation and strict risk management will be top priorities rather than trying to predict market bottoms amid declining liquidity.

Those holding positions should consider optimizing their holdings, while those seeking buying opportunities should choose the most advantageous prices and participate with moderate volumes.