Bitcoin’s Paradox: Why Sellers Become More Active During Price Rallies

A series of major outflows from Bitcoin ETFs has exposed an uncomfortable dynamic: the price level that should attract buyers back into the market is instead triggering sell-offs. Bloomberg reported on the trend.

According to K33 Research, US spot ETFs recorded massive outflows, with $1.7 billion withdrawn over five days. The selling pressure began when Bitcoin approached $83,000 — the average break-even price for ETF investors.

K33 analysts found that near this price level, the probability of large outflows exceeds 10%, compared with just 3% when prices remain at higher levels. The closer the market trades to investors’ break-even point, the more participants rush for the exit.

“Days with major outflows occur much more frequently when BTC/USD trades near its average purchase price. We associate this with market participants trying to avoid losses,” said Vetle Lunde of K33.

This level effectively acts as a ceiling: investors sell assets either to avoid deeper losses if the price falls further or to close positions with only minimal damage after a sharp drawdown.

In addition, the $83,000 level coincides with Bitcoin’s 200-day moving average, which analysts at CryptoQuant describe as the “key ceiling of the bear market.”

Bitcoin is currently trading around $77,400, well below its all-time high of $126,000. Outflows continued this week as well: according to Bloomberg, investors withdrew another approximately $1.1 billion by Wednesday.

The asset that spent all of 2024 riding a wave of Wall Street acceptance is losing momentum with investors in 2026. ETFs have made exiting the market just as easy as entering it. As a result, the market is now trapped between mechanical support near the bottom and a growing tendency to sell into every recovery rally.

K33 data also showed that during the first quarter, institutional investors — including funds such as Millennium and Jane Street — reduced their ETF exposure by 26,733 bitcoins amid declining crypto yields, while retail investors purchased 19,395 coins.