Investors pull $635M from Bitcoin ETFs amid Middle East tension

Investors withdrew $635 million from spot Bitcoin exchange-traded funds in a single day, the largest single-day redemption from those products since January. Fund flow records identify the outflow as concentrated in spot Bitcoin ETFs.

The redemptions occurred alongside heightened tensions in the Middle East, including a blockade in the Strait of Hormuz and stalled diplomacy between the United States and Iran. Market participants linked the timing of the withdrawals to broader risk-off moves across asset classes amid the regional uncertainty.

The outflow followed a short Bitcoin price rally after a White House announcement about a potential ceasefire earlier in May. The rally faded and ETF withdrawals resumed over subsequent sessions.

Market data and analysts say the scale of the $635 million redemption is large relative to recent daily flows and can affect short-term price expectations for Bitcoin. Pricing in prediction markets shifted sharply: the probability of Bitcoin trading between $76,000 and $78,000 by May 14 fell to about 5%, down from roughly 24% a week earlier.

Futures term structure and prediction-market pricing both showed reduced odds of near-term upside after the outflow. Observers noted that sustained withdrawals from ETFs, which serve as a major channel for institutional exposure to Bitcoin, often coincide with downward pressure on spot prices.

Developments that market participants are watching include any changes in U.S.-Iran negotiations, the operational status of shipping through the Strait of Hormuz, and whether ETF flows continue to trend outward or reverse. Announcements by large allocators of Bitcoin, including additional purchases or sales by major firms, are expected to have an immediate effect on trading dynamics.