Institutions Hold Firm Amid Bitcoin’s 50% Decline

The current Bitcoin drawdown is forcing a reassessment of a long-standing market assumption: that institutional capital would accelerate declines by exiting positions more aggressively than retail investors during periods of stress.

Coming into this cycle, scepticism around Bitcoin’s institutional adoption centred on a specific concern. Professional investors – bound by risk frameworks, performance benchmarks, and capital preservation mandates – were expected to act as a destabilising force in a downturn, potentially triggering sharper selloffs than those seen in earlier, retail-driven cycles.

So far, the data does not support that thesis, say analysts.

ETF Flow Resilience Counters Selloff Narrative

Since the launch of spot Bitcoin exchange-traded funds in January 2024, these vehicles have absorbed approximately $60 billion in net inflows through October 2025. Over the same period following that peak, Bitcoin’s price has declined by roughly 50%. Yet cumulative outflows from those ETFs have remained below $10 billion.

That imbalance – roughly six dollars retained for every dollar withdrawn during a significant drawdown – has become a focal point for market observers, including Bitwise Chief Investment Officer Matt Hougan.

“The best evidence we have is in the ETF market,” Hougan told CoinDesk. “Bitcoin ETFs accumulated roughly $60 billion in net flows from their launch in January 2024 through October 2025. Since October 2025, prices are down 50%, but we’ve seen less than $10 billion in outflows from ETFs.”

High-Conviction Allocations Shape Institutional Behaviour

Hougan attributes this resilience to structural factors rather than investor sentiment. Bitcoin remains a non-consensus allocation within institutional portfolios, and that positioning carries career risk for allocators. Diverging from peers – particularly in volatile assets – can have professional consequences, which in turn raises the bar for entry.

As a result, institutions that commit capital to Bitcoin tend to do so with a high degree of conviction. According to Hougan, allocators are typically “80% or 90% convinced” before taking exposure, a threshold that produces capital that is comparatively resistant to short-term market volatility.

Broader ownership trends reinforce this interpretation. A March 16 research note from Bernstein pointed to the increasing influence of spot ETFs and corporate treasury strategies in shaping Bitcoin’s supply dynamics. The report highlighted Strategy as a “bitcoin central bank of last resort,” noting that the company has accumulated more than 66,000 BTC in 2026 alone, at an average purchase price near $85,000.

A growing share of Bitcoin supply is now held in institutional vehicles. At the same time, around 60% of supply has remained dormant for more than a year, indicating a growing base of long-term holders.

Stabilising Flows and Late-Cycle Signals Emerge

Flow data also suggests that demand has begun to stabilise. Over three weeks through mid-March, spot Bitcoin ETFs recorded roughly $2.1 billion in net inflows, offsetting nearly all year-to-date outflows of $460 million.

Bloomberg Intelligence Senior ETF Analyst Eric Balchunas emphasised the significance of this trend in the context of the broader market decline.

“As an ETF watcher, you know just how absurd this strength amid a 50% drawdown. This is the real story, versus focusing on the $6 billion that came out, which most stories do.”

On-chain indicators provide an additional layer of context. Lacie Zhang of Bitget Wallet noted that “the convergence of on-chain indicators such as realised price and some suggest Bitcoin may be entering the late stage of a typical bear cycle, a phase historically associated with long-term accumulation rather than continued capitulation.”

For Hougan, these converging signals support a long-term valuation framework that remains unchanged. He reiterated his $1 million price target for Bitcoin, arguing that it does not require extraordinary assumptions.

“The wildest thing about my $1 million prediction is that it’s not wild at all,” he said. “It just needs what’s been happening for the past 10–20 years to keep happening for the next 10 years, and we’ll get there.”

Regardless of whether that target is realised, the behaviour of institutional capital during this downturn has already reshaped part of the market narrative. The cohort widely expected to exacerbate volatility on the downside has largely maintained its positions, introducing a different dynamic to Bitcoin’s current cycle.