Bitcoin’s status as a geopolitical hedge appears to be fading as institutional investors shift from heavy buying to profit-taking. After U.S.–Israel strikes on Iran, BTC recovered from a slump to $63,000, supported by over $1.14 billion in spot ETF inflows. However, the trend reversed sharply with significant outflows recorded later in the week, a pattern mirrored across major altcoin ETFs, signaling a broad cooling of institutional risk appetite amidst continued market infrastructure expansion.
Institutional demand drove a swift Bitcoin recovery following geopolitical events, with spot ETFs attracting more than $1.14 billion from March 2 to March 4. BlackRock’s IBIT led this charge with $892.2 million in inflows, helping BTC approach $72,000.
The bullish momentum weakened on March 5 as the ETF sector recorded $227.9 million in net outflows. Selling pressure intensified the next day with total outflows reaching $348.9 million, including a $158.5 million withdrawal from Fidelity’s FBTC and a rare $143.5 million outflow from BlackRock.
Remarking on the shift, Jacob King, CEO of SwanDesk, noted, “We’re witnessing the complete collapse of Bitcoin ETFs, which were once the most talked-about topic.” King further added, “What goes up must come down. Investors are realizing the mirage around Bitcoin is over.”
Ethereum ETFs reflected a similar sharp reversal after strong demand. They saw $169.4 million in inflows on March 4, supported by a rare $59.5 million investment into Grayscale’s product. However, Fidelity’s FETH then saw $115 million exit on March 5 and another $67.6 million leave on March 6.
The slowdown extended to other major altcoins. Solana’s inflow streak ended on March 5, contributing to a total sector outflow of $8.6 million by March 6. XRP ETFs also showed weakness, recording $22.77 million in combined outflows over the final two days of the week.
This caution unfolds alongside significant institutional expansion into crypto. 21Shares launched the first U.S. Spot Polkadot ETF, trading under the ticker TDOT. Separately, Morgan Stanley filed an updated S-1 registration for its Bitcoin Trust, demonstrating continued commitment.
Together, these moves suggest institutions are building infrastructure for a larger future multi-asset crypto market. The current outflows across Bitcoin, Ethereum, Solana, and XRP highlight a broader short-term cooling in institutional risk appetite.
