Understanding the Impact of Bitcoin ETF Redemptions on BTC's Price

Bitcoin's recent price surge faced a setback on January 12, as U.S. spot Bitcoin ETFs reported another day of negative outflows, capping the week. The BlackRock iShares Bitcoin Trust (IBIT) led this decline, resulting in a significant transfer of actual BTC to Coinbase Prime.

Key Takeaways

On January 12, Bitcoin ETFs, particularly BlackRock's IBIT, experienced significant outflows, leading to a halt in Bitcoin's price surge.
BlackRock moved large amounts of BTC to Coinbase Prime, indicating real cryptocurrency being sold into the market.
ETFs now exert pressure on Bitcoin prices not just through demand but also through redemptions that lead to actual selling.
Institutional activity is now a primary driver of Bitcoin price changes, with sentiment from retail investors playing a secondary role.

Bitcoin ETF redemptions explain why BTC stalled near $91k

According to data from Lookonchain, U.S. spot Bitcoin ETFs experienced a net outflow of 3,734 BTC for the day, which is approximately $339 million based on current prices. The bulk of the outflow came from BlackRock's IBIT, which saw a reduction of 2,791 BTC, while Grayscale's products accounted for an additional loss of 891 BTC.

The selling pressure intensified as Bitcoin struggled to maintain its position in the $91,000–$92,000 range, failing to sustain a recent breakout that had occurred earlier in the session.

BlackRock's BTC Transfers to Coinbase Prime: The Data Behind It

Blockchain data shed light on the ETF flows during this period. Analysis from Arkham Intelligence indicated that wallets associated with BlackRock's IBIT transferred significant amounts of Bitcoin to Coinbase Prime on January 12. The transactions, visible through Arkham’s tracker, comprised multiple transfers of 300 BTC each and a smaller transaction of 143 BTC.

In total, these visible deposits exceeded 3,400 BTC, closely matching the reported daily outflow from IBIT.

Bitcoin deposit by Blackrock after BTC ETF net outflow Source: Arkham Intelligence

Coinbase Prime serves as the main settlement venue for U.S. spot Bitcoin ETF issuers. When ETF shares are redeemed, authorized participants receive Bitcoin, which is generally routed through Prime before being sold in the spot market or redistributed across trading desks. Thus, these on-chain flows imply that BlackRock's ETF redemptions converted into real Bitcoin entering exchange liquidity pools.

ETF Redemptions Contributing to Active Selling Pressure

The available data indicates a structural change in Bitcoin trading patterns since the introduction of spot ETFs. Initially, ETFs acted as a significant demand driver in 2024, but they now function reciprocally. When investors withdraw funds, ETF issuers must obtain Bitcoin from custody and distribute it into the market, converting redemptions into direct sell-side pressure.

On January 12, BlackRock alone accounted for nearly three-quarters of the total Bitcoin ETF outflows, marking IBIT as a key player in that day’s liquidity event. Although Grayscale's products also experienced outflows, they were on a smaller scale. Meanwhile, Fidelity’s FBTC reported a small inflow of +87 BTC, which was not enough to offset the overall selling trend.

Bitcoin's Price Movement Reflects Institutional Activity

Bitcoin made an attempt to extend its recovery earlier in the day but faced resistance above $92,000, subsequently falling back towards $91,000 as ETF-related selling pressure emerged. The timing of the deposits tracked by Arkham closely aligns with this intraday decline, indicating that institutional flows, rather than retail sentiment, are driving short-term price movements.

With over 1.29 million BTC currently held across U.S. spot Bitcoin ETFs, even slight percentage changes in investor positioning can result in thousands of coins entering the market during a single session.

Implications for Bitcoin's Market Structure

This situation illustrates that Bitcoin is now experiencing a new phase in its market mechanics. Inflows and outflows from ETFs have transcended being mere sentiment indicators; they now directly influence physical settlement flows and spot market liquidity. BlackRock's transfer of thousands of BTC to Coinbase Prime exemplifies how swiftly ETF demand can shift from absorbing to distributing Bitcoin.

Consequently, price movements around crucial levels are increasingly shaped by institutional portfolio decisions, rather than just speculative trading activities.

Final Thoughts