Investors Rotate From Bitcoin to Ethereum and XRP as BTC ETFs See Large Outflows

Published: 2026-02-04 08:26:53 |

U.S. spot Bitcoin ETFs saw about $272 million in net outflows on Feb. 3, 2026, while Bitcoin (BTC) traded roughly between $73,000 and $76,000 amid thin liquidity and heightened macro-driven volatility. Data provider SoSoValue and market observers link the BTC outflows to low liquidity and rising sensitivity of Bitcoin to equity-market stress — notably a sharp drop in U.S. software/tech stocks tied to renewed AI-related disruption concerns (including news around Anthropic’s new automation tool). By contrast, spot Ethereum (ETH) ETFs recorded roughly $14 million in net inflows and XRP-related ETFs about $20 million the same day, suggesting rotation within crypto rather than wholesale withdrawals. Analysts interpret ETH inflows as demand for smart-contract and DeFi exposure, and XRP flows as interest in cross-border payment narratives or relative-value trades. Key takeaways for traders: monitor ETF flows (BTC, ETH, XRP) as near-term liquidity signals; expect higher short-term BTC sensitivity to macro and tech-sector headlines; view ETH and XRP fund flows as potential rotation opportunities in risk-off episodes; and watch for recurring tech-sector volatility that could trigger further BTC correlation with equities. This report is informational and not investment advice.

Bearish

The large, concentrated net outflow from spot Bitcoin ETFs ($272M) on Feb. 3 and the accompanying price swing indicate weakened near-term demand and thinner liquidity for BTC. BTC’s heightened sensitivity to macro and tech-sector headlines increases the likelihood of short-term downside during risk-off events, making immediate price pressure more probable. Offsetting flows into ETH and XRP suggest investor rotation rather than systematic exit from crypto, so the negative impact is concentrated on BTC itself rather than the market broadly. For traders: expect elevated intraday volatility and potential further BTC selling when equity-market stress or low liquidity recurs; hedge or reduce directional BTC exposure around macro/tech news; consider ETH and XRP as short-term alternative exposures during BTC weakness. Over the medium to long term, fundamentals and broader ETF adoption could stabilize BTC, but the near-term price bias from this specific event is bearish.