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Institutions Buy $1.42 Billion in Bitcoin ETFs, Why Is the Market Falling Instead of Rising?

Last week, US Bitcoin ETFs saw $1.42 billion in institutional capital inflows, yet the market surprisingly declined. This article delves into the divergence phenomenon of “strong buying but weak prices,” revealing multiple underlying reasons such as early holders cashing out and market structure shifts, and offers prospects on future regulatory impacts and market trends, providing a unique perspective to understand the complex game in the current crypto market.

According to the latest market data, last week’s net inflow into US spot Bitcoin ETFs reached $1.42 billion, marking a recent peak in institutional capital inflows. Paradoxically, this capital outflow contrasts sharply with the market environment: regulatory frameworks are becoming clearer, and mainstream acceptance is increasing. Yet, Bitcoin’s price has fallen from the October 2025 high of $126,080 to about $95,440, a decline of over 19%.

Despite such strong buying support, the Bitcoin market did not respond with a rise; instead, it showed weakness or even declined. This article will analyze the multiple logical reasons behind the divergence of Bitcoin ETF net inflows of $1.42 billion and the market’s decline, interpreting the complex relationship between ETF capital flows and market price fluctuations.

Bitcoin Price Market Performance: Visualizing Data Divergence
In the early 2026 cryptocurrency market, the divergence between capital flows and price trends has become a prominent feature. The net inflow of $1.42 billion into Bitcoin ETFs last week challenges the traditional financial market logic that “capital inflows drive prices higher.”

Data shows that institutional investors are steadily increasing their holdings via spot Bitcoin ETFs. Bloomberg analysts describe this rally as “more stable and longer-lasting than previous speculative-driven rallies.” Reuters characterized this capital inflow as “a sign that crypto assets are beginning to become a permanent part of diversified investment portfolios.”

Last week, Bitcoin ETF net inflows reached $1.42 billion, with $841 million on the 14th alone, according to Coinglass.

However, in stark contrast to the institutional capital inflows, market price reactions have been relatively muted. Bitcoin has declined over 6% cumulatively in 2025, significantly underperforming gold, which rose over 70%, and the S&P 500, which increased about 17%.

Even more puzzling is that Bitcoin has decoupled from its traditional allies—tech stocks and risk assets—while the S&P 500 has repeatedly hit new highs during the same period.

This abnormal phenomenon is no longer just a technical correction but a signal of underlying market structural changes. Institutions are buying Bitcoin through ETF channels, while early holders may be systematically exiting through the same channels, forming a market rebalancing mechanism.

Learn more about Bitcoin ETFs: What is a Bitcoin ETF

Core Reasons for Institutional Buying and Market Decline
Multiple forces intertwine, jointly suppressing Bitcoin’s upward momentum. The $1.42 billion Bitcoin ETF net inflow appears strong but has not translated into the expected price gains.

Holders Cashing Out and ETF Inflows as Hedging
Early holders cashing out and ETF inflows form a hedge, which is a key explanation for the market divergence. While new funds continue to flow into ETFs, many early “whale” holders choose to take profits at high prices.

This long-term holder selling directly absorbs new ETF buying, significantly reducing net purchasing power. K33 Research’s 2025 annual review states, “Due to large-scale profit-taking by early holders,” Bitcoin underperformed compared to mainstream assets like US stocks and gold.

Whale Selling Pressure Is Diminishing, Source: CryptoQuant

Deep Market Structural Changes
Beyond early holders’ profit-taking pressure, deeper market structural shifts also inhibit upward price momentum.

Market leverage and sentiment have undergone fundamental changes. In early October 2025, the market experienced a massive deleveraging process, with over $19 billion in leveraged positions liquidated. Since then, the market has not rebuilt leverage but fallen into a wait-and-see mood. Participants are neither eager to sell nor willing to quickly enter, leading to decreased liquidity and shrinking trading volumes.

As the market matures, the factors driving prices are also changing. Cointelegraph analysis indicates that in 2026, narratives such as ETF capital flows and regulatory developments explain Bitcoin’s market behavior more than price trends alone. This means that even with capital inflows, if there is a lack of positive regulatory progress or other supportive narratives, prices may struggle to rise.

Future Price Breakthrough Drivers for Bitcoin
Whether Bitcoin’s price can break through in the future depends on sustained demand and the resolution of structural issues, involving multiple considerations such as capital inflows, regulatory progress, and market maturity.

Sustained and Strong Capital Inflows
Institutional capital needs continuous and robust inflows to truly reverse the trend. Short-term inflows are insufficient to offset the ETF market’s cumulative net outflows. For example, on January 7, 2026, Bitcoin ETFs experienced a single-day net outflow of $486.1 million. Analysts point out that to truly reverse the trend, “several weeks of strong capital inflows are required.”

On January 7, Bitcoin ETF saw $486 million outflow, Source: Coinglass

Regulatory Variables Activate the Market
Regulatory progress is a critical variable. The long-term development of the market largely depends on clear regulatory policies. The passage of the 2025 “GENIUS Act” was a major breakthrough. The next key step is whether Congress can pass legislation like the “CLARITY Act,” which would define the market structure. If passed, it would clarify the regulatory framework for cryptocurrencies in the US, potentially alleviating compliance concerns that have long troubled institutional investors and reactivating market demand.

Bitcoin Supercycle Transition
Some analysts believe the market may be transitioning into a “supercycle.” As governments and corporations incorporate digital assets into their balance sheets, the traditional four-year cycle of cryptocurrencies may be ending. Instead, a “supercycle” with lower volatility and longer duration could emerge. Bitwise also predicted in 2026 that “Bitcoin will break the ‘four-year cycle’ and reach new all-time highs.”

Under this new paradigm, even if short-term prices diverge from capital flows, it may be a sign of market maturation, laying the foundation for more stable growth in the future.

Summary
Currently, with Bitcoin’s price fluctuating around $95,000, investors are reassessing Bitcoin’s role in diversified portfolios. The market is shifting from a leverage-driven speculative phase to a more mature stage defined by institutional capital, regulatory frameworks, and real demand.

In this silent transition, good news and the abnormal weakness in prices coexist, perhaps an inevitable pain point in market maturation. Only when genuine, sustained structural demand emerges can the market break the current deadlock. $BTC