Bitcoin’s short phase as a war hedge seems to be fading as institutional investors move from heavy buying to taking profits. After the U.S.–Israel strikes on Iran, Bitcoin quickly recovered from its slump, reaching around $63,000. This recovery was supported by strong institutional demand, with more than $1.14 billion flowing into spot Bitcoin ETFs between March 2 and March 4, led by BlackRock’s IBIT inflows of $892.2 million, including a $306.6 million single-day inflow on March 4. This helped Bitcoin recover toward the $72,000 level.
However, momentum started to weaken on March 5 when ETF-sector net outflows reached $227.9 million, with selling pressure increasing to $348.9 million by March 6. Fidelity’s FBTC posted the largest withdrawal at $158.5 million, while BlackRock also recorded a rare outflow of $143.5 million. Jacob King, CEO and Founder of SwanDesk, warned that Bitcoin ETFs have effectively collapsed, saying, “What goes up must come down. Investors are realizing the mirage around Bitcoin is over.” The slowdown extended to other major altcoins like Solana and Ripple.
Ethereum ETFs saw strong demand earlier, with $169.4 million in inflows, supported by a $59.5 million investment into Grayscale’s ETH product. Fidelity’s FETH became a major source of outflows, recording $115 million leaving on March 5 and $67.6 million on March 6, while Solana’s earlier inflow streak ended on March 5 after $6 million exited Fidelity’s FSOL, contributing to a total sector outflow of $8.6 million by March 6. One major development came when 21Shares launched the first U.S. Spot Polkadot ETF, trading under the ticker TDOT, and Morgan Stanley filed an updated S-1 for its Bitcoin Trust, signaling continued institutional engagement despite the shifting flows. The week’s reversal underscores growing caution among institutional investors, with outflows across Ethereum, Solana, and XRP indicating caution beyond BTC.
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