Bitcoin’s sharp correction in 2026 has rattled exchange-traded fund investors, but some market watchers argue the ongoing sell-off may ultimately strengthen the long-term investment case for the world’s largest cryptocurrency.
After climbing to $126,000, Bitcoin has retraced to nearly $63,000, mirroring weakness in US tech equities and prompting five straight weeks of net outflows from spot Bitcoin ETFs. According to data from UK-based investment firm Farside Investors, Monday alone saw more than $200 million exit US-listed Bitcoin ETF products.
Yet EMJ Capital founder Eric Jackson believes the current wave of selling represents a transition phase rather than the end of Bitcoin’s bull narrative.
Bitcoin’s ETF Era Changes Its Identity
Jackson argues that Bitcoin did not fail as an asset but rather “succeeded as an ETF,” fundamentally altering who holds it and how it trades.
Since the approval of US spot Bitcoin ETFs, institutional investors have become the marginal buyer in this cycle. Unlike the 2021 rally, which was fueled heavily by retail participation, this run was shaped by fund managers and asset allocators integrating Bitcoin into diversified portfolios.
As a result, Bitcoin’s price has increasingly tracked technology equities. Jackson notes that BTC has been moving closely with BlackRock’s iShares Expanded Tech-Software Sector ETF. When IGV sells off, Bitcoin has followed.
BlackRock also operates the largest US spot Bitcoin ETF, the iShares Bitcoin Trust. The overlap in investor base, Jackson suggests, has effectively turned Bitcoin into a high-beta extension of tech stocks rather than a standalone store of value.
“That is not how a digital gold narrative behaves,” he observed, pointing out that while gold has recently hit fresh all-time highs, Bitcoin has lagged behind.
Institutional Exit or Market Reset
The current sell pressure reflects portfolio rebalancing rather than a collapse in conviction, analysts say. Large asset managers tend to reduce risk exposure during periods of macro uncertainty, especially when tech equities weaken.
US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors
Data shows that US spot Bitcoin ETFs have logged consistent net outflows in recent weeks, compounding already soft price action. BTC slipped below $63,000 on Tuesday, its lowest level since revisiting 15-month lows earlier in February, according to market data from TradingView.
Some traders are now eyeing potential downside toward the $50,000 range as a macro bottom target.
Still, Jackson views this period as a cleansing phase. Every cycle, he argues, weaker hands exit at major price peaks, making way for investors with longer time horizons. Retail investors capitulated near $20,000 in 2017. Funds distributed near $69,000 in 2021. Now, ETF allocators are trimming positions around $63,000.
In his view, that pattern is consistent with past cycles rather than evidence of structural weakness.
Stablecoins and Liquidity in Focus
Beyond ETF flows, liquidity indicators are also under scrutiny. Jackson believes that a renewed expansion in stablecoin supply on exchanges could serve as a meaningful bullish catalyst.
Stablecoin growth has historically coincided with rising crypto market liquidity and stronger price momentum. Without that expansion, upside attempts may remain constrained.
For now, institutional flows and broader equity market performance continue to dominate Bitcoin’s short-term direction. The tight correlation with tech ETFs underscores how integrated Bitcoin has become within traditional financial markets.
The Next Wave of Institutional Buyers
Looking ahead, Jackson forecasts a shift in the type of capital entering Bitcoin markets. While ETF allocators may rotate exposure quarterly, he expects future inflows from sovereign wealth funds, corporate treasuries and pension funds.
Such capital, he argues, would operate on decade-long horizons rather than cyclical trades. Unlike ETF-driven flows tied to tech benchmarks, this category of investor may treat Bitcoin as a strategic reserve asset.
If that shift materializes, it could reduce Bitcoin’s correlation with high-growth equities and restore its positioning as a long-term store of value.
For now, however, Bitcoin remains caught between two identities. It is both a speculative tech-linked asset and a maturing institutional product. The recent ETF-driven sell-off may feel like a setback, but some analysts see it as a transition point.
As Jackson put it, the institutional exit may not mark the end of Bitcoin’s thesis. It may simply be the filtering process that defines who holds it next.
