First liquidation of US Bitcoin spot ETF…July capital inflow also lowest ever

▲ Bitcoin (BTC) Exchange Traded Fund (ETF) ©CoinReaders

As the first product liquidation in the U.S. Bitcoin spot ETF market has been decided, the net inflow in July plummeted to $205 million, the lowest since its launch. Separate from the recovery in Bitcoin (BTC) prices, institutional demand is rapidly weakening, further sharpening the polarization among the 12 products.

According to investment media TradingNews on August 4 (local time), the Hashdex Bitcoin ETF will enter liquidation procedures as its assets under management decreased to approximately $14.7 million as of July 30. This product will be traded on NYSE Arca until August 17, then delisted. The remaining approximately 225 Bitcoins will be sold, and cash will be distributed to shareholders around August 28.

This liquidation is the first such case since the launch of the U.S. Bitcoin spot ETF 19 months ago. The product was launched as a futures ETF in September 2022 and converted to a spot product in March 2024, but its maximum assets under management only reached approximately $17.54 million, failing to grow in scale. Its management fee was also set at 0.25%, the same as the largest products in the market, failing to secure a differentiation point in liquidity and cost competition.

Market concentration is extreme. The net assets of the leading product, iShares Bitcoin Trust (IBIT), are $47.08 billion, approximately 3,200 times that of the liquidated product, accounting for about 61% of the total market assets. Its cumulative net inflow since launch is $60.5 billion, and estimated holdings are approximately 739,000 BTC, reaching about 3.5% of the maximum supply of 21 million. In contrast, the net assets of the second smallest product are only $142.4 million.

The net inflow into U.S. Bitcoin spot ETFs in July was approximately $205 million, the lowest since their launch in January 2024. After a net inflow of $1.97 billion in April, $2.43 billion in May, and a net outflow of $4.52 billion in June, it barely recovered to positive in July, but the inflow volume decreased by approximately 90% compared to three months prior. The proportion of trading days with net outflows in 2026 also reached 54%, significantly exceeding 31% in 2024 and 40% in 2025.

The media analyzed that for mechanical buying to revive and support Bitcoin prices, monthly net inflows must consistently exceed $500 million. Spot ETF fund flows were presented as explaining about 45% of weekly price movements. While the overall market net assets of $77.6 billion and cumulative net inflows of $51.5 billion indicate that the foundation itself is maintained, a diagnosis suggests that continued monthly inflows below $200 million could lead to additional liquidations, especially among smaller products.

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