Bitcoin Faces Bull Trap Concerns as ETF Outflows Continue
March 8, 2026
The recent significant outflows from US cryptocurrency exchange-traded funds (ETFs) have raised concerns about the sustainability of Bitcoin’s recent rally. Some traders are warning that this rally could be a short-lived bull trap.
For the second consecutive day, BTC ETFs experienced a sell-off, with over $348 million pulled out on March 6, the largest daily withdrawal since February 14. Notably, Fidelity’s CBOE saw the biggest outflow, losing approximately $159 million in a single session, followed by BlackRock’s IBIT with over $143 million leaving the fund.
Bitcoin’s price has dropped by nearly 2% over the last 24 hours and is down by around 22% since the beginning of the year. The overall cryptocurrency market cap slightly decreased, now sitting at around $2.32 trillion. Investor sentiment as measured by the Fear and Greed index is currently showing “Extreme Fear” among market participants.
Ether ETFs also experienced a similar trend, with $82.9 million in net withdrawals on the same day. Fidelity’s FETH suffered a loss of $67.6 million, while Grayscale’s ETH saw a decrease of $6 million. On March 5, these funds recorded a $90 million sell-off.
Despite a brief period of increased demand for ETFs earlier in the week, where Bitcoin ETFs received $458 million in inflows on March 2, followed by $225 million on March 3 and $461 million on March 4, the trend reversed on March 5 when ETFs experienced $227.9 million in withdrawals.
Binance recently released its proof-of-reserves report, revealing that BTC balances on the platform declined by about 8,004 BTC month over month, with user holdings now standing at approximately 631,000 BTC. Ethereum balances also dropped significantly, decreasing by 7.35% to around 3.87 million coins.
The weakening momentum in the cryptocurrency market has led to concerns about the altseason, with major tokens such as Ether, Solana, Cardano, Dogecoin, and Shiba Inu experiencing significant declines from their all-time highs. The recent decrease in exchange reserves suggests that investors are moving assets into cold storage, indicating a lack of preparation for selling.
Market volatility fueled by macroeconomic conditions, such as recent geopolitical tensions, has added to the uncertainty in the crypto market, contributing to the potential for a short-lived bull trap. As altcoins struggle to regain traction and ETF outflows continue, the cryptocurrency market faces increased downside risk for tokens.
