Wintermute: Bitcoin still lacks the inflows needed to confirm a true market bottom
Bitcoin’s latest downturn does not yet resemble a definitive market bottom, primarily because fresh capital-especially from institutions-is still absent, warns algorithmic market maker Wintermute. Despite signs of distressed selling and growing losses among holders, the firm argues that the market is missing one crucial ingredient for a sustainable reversal: strong, persistent inflows, particularly into spot Bitcoin ETFs.
At the start of the week, Bitcoin (BTC) was trading near 61,828 dollars, according to market data, down roughly 3.2% over the previous 24 hours and more than 14% over the last seven days. The decline pushed BTC to its lowest levels since September 2024 and dragged the broader crypto complex lower as well. Total cryptocurrency market capitalization slipped around 2.8% to about 2.21 trillion dollars, underscoring the breadth of the correction across digital assets.
Derivatives markets have been hit hard by the pullback. Over the last day alone, more than 1.78 billion dollars in leveraged positions were liquidated, with long traders bearing most of the pain. Total open interest in crypto derivatives hovered near 103.5 billion dollars, while daily futures trading volume was about 173.8 billion dollars. The shakeout in leverage is typical of major corrections, but Wintermute contends that what follows this washout is what really matters-and that is where the current episode looks weaker than prior cycles.
In its latest weekly commentary, Wintermute emphasizes that this downturn differs from earlier pullbacks in one key respect: institutional demand is not just pausing, it is deteriorating. Instead of seeing large buyers step in to accumulate BTC on weakness, the firm observes that big U.S. players are continuing to reduce exposure. In their view, this leaves the market exposed to further downside, as there is no clear “whale bid” ready to catch falling prices.
The firm argues that recent focus on a specific sale-most notably Strategy’s sale of 32 BTC between May 26 and May 31-has distracted from the broader structural problem. In absolute terms, that transaction was small and not nearly large enough to explain the scale of the recent drop. For Wintermute, the more important story is the ongoing retreat of U.S. institutional investors who were instrumental in launching Bitcoin’s rally earlier in the year. Their withdrawal removes a powerful source of support that had previously absorbed volatility and attracted follow-on retail interest.
Nowhere is this shift more apparent than in spot Bitcoin ETF flows. After a strong start to the year, U.S.-listed spot Bitcoin ETFs have seen a persistent wave of redemptions in recent weeks. Data shows that on June 8 alone, the products recorded a net outflow of 91.37 million dollars, reversing the tentative inflows logged at the beginning of the month. Between May 15 and June 3, spot Bitcoin ETFs suffered 13 consecutive sessions of net outflows, draining roughly 4.37 billion dollars from the segment before a brief pause in redemptions on June 4.
The first week of June was especially brutal, with about 1.72 billion dollars in net outflows from U.S. spot Bitcoin ETFs. BlackRock’s IBIT led the pack in withdrawals, losing around 1.38 billion dollars over that period, while Fidelity’s FBTC saw about 201.9 million dollars exit. These are not isolated data points; rather, they signal a trend of institutional and advisor-driven capital stepping back from Bitcoin exposure.
As a result, total net assets across U.S. spot Bitcoin ETFs have shrunk significantly. From a peak of more than 100 billion dollars in mid-May, assets dropped to approximately 79.6 billion dollars by June 8. Such a steep decline in ETF assets in a short period not only reflects falling prices but also active selling by investors who had previously been seen as “sticky” longer-term holders. For a market that has increasingly treated ETF flows as a proxy for institutional interest, this reversal is a major red flag.
Wintermute reinforces this view with other institutional indicators. The firm notes that the Coinbase premium-often used as a barometer of U.S. institutional demand when compared to offshore exchanges-has turned negative. At the same time, over-the-counter (OTC) trading activity, which is commonly used by larger players to enter or exit positions discreetly, has been weakening. Together, these signals suggest that professional desks in the United States are not looking to aggressively buy this dip. Instead, they appear to be adopting a defensive posture, using periods of liquidity to trim positions and lower risk.
This cautious behavior is unfolding against a macro backdrop that has become increasingly hostile to speculative assets. Recent U.S. economic data surprised to the upside, with the latest nonfarm payrolls report showing that the economy added around 172,000 jobs in May, comfortably beating expectations. Meanwhile, inflation in the services sector has picked up again, reinforcing the view that the Federal Reserve will keep interest rates elevated for longer than many risk-asset bulls had hoped.
Markets are now pricing in roughly a 98% probability that the benchmark federal funds rate will remain unchanged through the end of 2026. The yield on the U.S. 10-year Treasury has climbed to about 4.57%, extending a trend of higher real yields. Elevated yields on safe government bonds increase the opportunity cost of holding non-yielding or highly volatile assets such as Bitcoin and other cryptocurrencies, making them less attractive for conservative or yield-sensitive investors.
Wintermute points out that these macro conditions, combined with fading enthusiasm in the AI-fueled stock market rally, have eroded investors’ risk appetite. When returns in equities tied to artificial intelligence cool and bonds offer increasingly compelling yields, speculative pockets of the market-crypto among them-tend to suffer from capital rotation. That shift, the firm argues, is part of why institutional inflows into Bitcoin have stalled just as prices tested critical support levels.
Still, the picture is not uniformly bearish. On-chain metrics are beginning to show hallmarks of capitulation, a phase often associated with late-stage selloffs and eventual market bottoms. CryptoQuant analyst Gaah highlights that the seven-day moving average of Bitcoin Supply in Loss has jumped to around 50%, the highest level of the year. This metric tracks the proportion of circulating BTC that is currently held at a loss relative to its holders’ cost basis.
Historically, when this indicator has risen above 50%, it has coincided with episodes of intense market stress, where a large share of participants are underwater and more prone to panic selling or forced liquidation. Past instances of such elevated readings have frequently aligned with major cycle lows. The last time the indicator reached comparable levels was in November 2022, shortly after Bitcoin plunged below 20,000 dollars in the wake of the FTX collapse. That period ultimately marked a long-term bottom, from which BTC embarked on a new multi-month uptrend.
Because of this, some analysts argue that while the current environment is uncomfortable, it may also be laying the groundwork for a new accumulation phase. Wintermute itself acknowledges that certain longer-horizon investors are indeed beginning to step in, gradually adding Bitcoin at these levels. These participants tend to be less sensitive to short-term volatility and more focused on multi-year adoption and halving-driven supply dynamics. For them, a 14% weekly drawdown in a structurally bullish thesis is an opportunity rather than a reason to exit.
However, Wintermute stresses that gradual buying by patient capital alone is unlikely to spark a strong and durable uptrend. In previous cycles, lasting recoveries were typically preceded by a clear shift in institutional behavior-visible through positive ETF flows, rising OTC volumes, and renewed premiums on U.S.-based exchanges. Until that pattern re-emerges, the firm believes that any bounce is at risk of turning into a “relief rally” rather than the start of a sustained bull leg.
Looking forward, Wintermute singles out the upcoming SpaceX IPO scheduled for June 12 as a useful barometer of broader risk sentiment. A strong reception, characterized by robust demand and aggressive pricing, could indicate that appetite for high-growth, high-risk assets remains healthy despite tighter monetary conditions. Conversely, a weak or cautious IPO environment might reinforce the view that investors are dialing back risk across the board, which would be a negative signal for Bitcoin and other digital assets.
For traders and investors trying to interpret these crosscurrents, the message from Wintermute is nuanced. On the one hand, traditional signs of stress-large liquidations, widespread losses among holders, and rising fear-are already present. On the other, the crucial ingredient that has confirmed past bottoms, namely a powerful resurgence in institutional inflows, is still missing. That gap leaves room for further volatility and potential downside before a solid price floor is established.
From a strategic perspective, this environment encourages differentiated approaches based on time horizon. Short-term traders may find opportunities in volatility, but they must contend with a market that lacks a clear institutional backstop. Aggressive dip-buying in such conditions carries heightened risk if ETF outflows and macro headwinds persist. Conversely, disciplined long-term investors might continue to scale in slowly, accepting that timing an exact bottom is nearly impossible but that periods of fear and forced selling tend to offer more favorable entry points than euphoric peaks.
Another key variable to watch is how quickly the narrative around interest rates and inflation evolves. Any credible signal from the Federal Reserve that it is preparing to ease policy sooner than currently expected could change the calculus for risk assets. Lower yields would reduce the relative attractiveness of cash and bonds, potentially reigniting interest in Bitcoin as both a speculative vehicle and, for some, a macro hedge. Until such a shift becomes visible in data and central bank guidance, however, digital assets remain at the mercy of a “higher for longer” regime.
Investors should also be aware that ETF flows often lag sentiment rather than lead it. Professional allocators typically adjust positions after reassessing their macro views, internal risk models, and client mandates. That means that by the time spot Bitcoin ETF flows turn decisively positive again, the market may already have established a bottom and started to recover. For those waiting on clear confirmation from institutional flows, there is a trade-off between safety and entering at more attractive prices.
In summary, current market conditions show elements of classic capitulation but lack the strong inflows that usually mark a durable turning point. Bitcoin has faced sharp price declines, heavy liquidations, and rising unrealized losses, yet U.S. institutions are still stepping back rather than stepping in. Until spot Bitcoin ETF inflows return on a consistent basis and major institutional buyers re-engage with meaningful size, Wintermute believes that calling a definitive market bottom remains premature.