US-listed spot bitcoin exchange-traded funds recorded $643 million in net outflows on Friday, ending a four-day run of inflows and pushing the sector into negative territory for October. The withdrawals followed a sharp move in bitcoin and reports of a major security breach involving Binance, reinforcing how quickly ETF demand can reverse when traders reassess market and custody risks.
October finished with $515 million in net withdrawals from US spot bitcoin ETFs, the first monthly outflow since June, according to data compiled by SoSoValue. The funds nonetheless remained positive for 2026 through the end of October, with roughly $361 million in cumulative net inflows.
BlackRock's iShares Bitcoin Trust, trading under the ticker IBIT, accounted for $234 million of Friday's withdrawals, according to Farside Investors. Fidelity's Wise Origin Bitcoin Fund, or FBTC, saw the next-largest daily exit at $201 million. Together, the two products represented more than two-thirds of the day's total outflows.
The scale of the withdrawals shows that demand for spot bitcoin ETFs remains closely tied to short-term confidence in bitcoin's price and in the infrastructure that supports institutional access to the asset. IBIT and FBTC are among the largest US spot bitcoin funds, so redemptions from those products can shift aggregate flow figures quickly even when other ETFs report comparatively modest activity.
Bitcoin price drop preceded the fund withdrawals
Bitcoin fell to about $77,000 on Thursday before the ETF outflows were recorded, according to the supplied market data. Binance, the world's largest crypto exchange by trading volume, said Friday that hackers had stolen roughly $6.3 billion in crypto assets.
The timing put security concerns alongside an already volatile price move. ETF share redemptions do not necessarily mean fund holders are withdrawing bitcoin directly; authorized participants typically create and redeem ETF shares through the fund structure. But large net outflows can signal that professional market participants and traders are reducing exposure to bitcoin through regulated investment vehicles.
The October reversal was particularly abrupt because spot bitcoin ETFs had registered four consecutive days of inflows before Friday. That pattern suggests the month's negative result was driven substantially by the final trading session rather than by persistent withdrawals throughout October.
Flows into US spot bitcoin ETFs have become a closely watched gauge of demand because they offer exposure to bitcoin through brokerage accounts without requiring holders to manage private keys or use a crypto trading platform. Their monthly totals can also obscure large daily swings, especially during periods when bitcoin's price changes rapidly.
Custody questions surface after security incident
Yishi, founder and chief executive of hardware wallet company OneKey, said in an X post on Friday that BlackRock's IBIT could face related security risks because of its reliance on Coinbase for bitcoin custody. The post did not identify a specific incident involving IBIT or its holdings.
The concern points to a recurring debate surrounding crypto ETFs: the separation between an ETF issuer, which manages the product, and the specialist custodian responsible for safeguarding the underlying bitcoin. Coinbase Custody has been selected by several US spot bitcoin ETF issuers, concentrating a significant share of the sector's custodial operations with one provider.
That concentration can create a common operational dependency, although it does not establish that ETF assets were affected by the reported Binance hack or that a breach at one platform would automatically compromise another firm's systems. ETF custody arrangements generally use segregated accounts and contractual controls, but traders will likely examine those arrangements more closely when large security incidents dominate market attention.
The incident also illustrates why the security profile of an ETF differs from self-custody. ETF shareholders own shares in a fund rather than controlling the private keys to the bitcoin held by its custodian. That trade-off gives users conventional market access and delegated asset protection, while placing operational trust in the fund issuer, custodian and associated service providers.
Ether funds recorded a record monthly withdrawal
US spot ether ETFs also saw $156 million in net outflows Friday, according to SoSoValue. The final-day withdrawal lifted October's total net outflow for the group to $1.61 billion, surpassing the previous monthly record of $1.42 billion set in November 2025.
The October exodus reversed ether ETFs' cumulative position for the year. By the end of the month, the funds had recorded about $45 million in net outflows for 2026.
Ether's deeper monthly withdrawal total indicates that the pressure was not confined to bitcoin products. Bitcoin ETFs remained net positive for the year despite October's retreat, while ether funds slipped back into negative year-to-date territory. That difference reflects the smaller margin of inflows ether products had accumulated earlier in 2026, leaving them more exposed to a single heavy month of redemptions.
The record ether outflow also places the market reaction in a broader context than a single fund or a single custody provider. When traders reduce positions in both bitcoin and ether ETFs during a volatile week, the decision may reflect falling token prices, risk controls, changing expectations for liquidity, or concern over digital-asset infrastructure.
Flow data will test whether withdrawals persist
Friday's figures offer a sharp snapshot rather than proof of a sustained retreat from spot crypto ETFs. The next several trading sessions will show whether the October result was a concentrated reaction to market stress or the beginning of more persistent redemptions.
A return of net inflows, particularly into the largest bitcoin products, would indicate that buyers are again using ETFs to gain exposure after the price decline. Continued withdrawals would leave fund issuers and custodians facing more scrutiny over liquidity, asset protection and their ability to reassure shareholders during periods of heightened security concern.
For now, the October numbers leave a clear contrast: US spot bitcoin ETFs retained a positive net-flow balance for 2026 despite their first negative month since June, while spot ether ETFs ended the month with a record withdrawal total and moved into net outflows for the year.
Worried about ETF volatility? Learn how ETFs really work before making your next crypto move.
Disclaimer: The content on this page is provided for general informational purposes only and does not represent the views or financial advice of Toobit. We make no guarantees regarding the accuracy or completeness of this information and shall not be held liable for any errors, omissions, or outcomes resulting from its use. Investing in digital assets involves risk; users should independently evaluate their financial situation and the risks involved. For further details, please consult our Terms of Service and Risk Disclosure.
