Blackstone sells $718 million in a single day: institutional retreat or a normal step in risk rebalancing

Bitcoin and Ethereum experienced a wave of “institutional selling” on January 21. Several ETFs led by BlackRock significantly reduced their positions within a single day, selling approximately $480 million worth of Bitcoin and over $238 million of Ethereum. This move quickly propagated through the market, triggering a weakening of market sentiment. But if you judge “institutions are fleeing” solely based on these numbers, that would be too superficial.

The Truth About Short-Term Selling: Rebalancing, Not Retreat

Details of the net outflow in a single day

According to the latest data, the US Ethereum spot ETF recorded a net outflow of $238.55 million on January 21, with BlackRock’s ETHA product outflowing $100.90 million, Fidelity FETH outflowing $51.54 million, and Bitwise ETHW outflowing $31.08 million. The situation on the Bitcoin side is similar, with major fund managers like BlackRock conducting synchronized risk control operations within the same time window.

This synchronization is crucial. It’s not an action by a single fund but a collective response from the entire institutional layer to macroeconomic conditions. Changes in interest rate expectations, a strengthening dollar, rising asset volatility—these factors prompted fund managers to perform routine rebalancing.

Amplification of Market Sentiment

In the short term, this wave of selling did put pressure on the market. Bitcoin dropped 1.38% within 24 hours on January 21, and over the past 7 days, it declined by 5.69%, with the current trading price around $89,632. While this decline isn’t severe, combined with news of large-scale selling, it can be easily interpreted by traders as a “withdrawal of institutions,” further amplifying short-term selling pressure.

The derivatives market also cooled down, with some contract funding rates turning negative, indicating that bearish sentiment is indeed rising. This is a typical emotional transmission chain: big sell-off news → negative funding rates → retail panic selling → short-term selling pressure manifests.

But this is only half the story

Long-term allocations are still ongoing

Here’s an interesting contradiction: despite the large-scale sell-off on January 21, looking at a longer time horizon, the cumulative inflow into the US spot Bitcoin ETF since 2026 has exceeded $1.7 billion. BlackRock’s IBIT product alone attracted $600 million in a single week.

What does this indicate? It shows that the overall direction of institutional allocation remains inflow. The single-day sell-off may just be a fluctuation during rebalancing or a phased reduction after profits—normal asset management operations, not a sign of bearish outlook.

On-chain data signals

Even more interesting are on-chain data. According to market reports, large holders (whale addresses) increased their holdings by 34,000 Bitcoin over the past week. These major players usually have the sharpest market intuition—they tend to accumulate during price pullbacks, which is often a contrarian indicator.

In other words, while institutions like BlackRock are managing risk, other funds are quietly accumulating. The market operates this way—some are reducing positions at high levels, others are deploying at lows.

Ethereum faces different pressures

Reasons for relative weakness

Ethereum’s selling pressure appears more pronounced than Bitcoin’s. Possible reasons include:

1. Under macro uncertainty, institutions tend to reduce risk exposure first, and Ethereum’s risk profile is generally higher than Bitcoin’s.
2. Ethereum is the backbone of DeFi and tokenization ecosystems; capital flows often influence a broader range of crypto assets, prompting institutions to preemptively reduce holdings.
3. Lack of strong short-term fundamental catalysts leaves institutions with little reason to hold firm.

But fundamentals have not worsened

It’s important to note that Ethereum’s network upgrades, scalability improvements, and developer activity are still progressing positively. Upgrades like Glamsterdam and active restaking models are positive signals. The selling more reflects a short-term risk management shift rather than a negation of long-term value.

The cyclical nature of ETF volatility

Why do these fluctuations recur?

Institutional rebalancing is cyclical. Once rebalancing is complete and selling pressure diminishes, prices tend to recover quickly. We’ve seen multiple similar scenarios: big sell-off news → short-term panic → rapid price rebound.

This doesn’t mean declines won’t happen, but a single day of large outflows doesn’t necessarily indicate a long-term trend reversal. For medium-term investors, tracking daily ETF flows and on-chain liquidity changes offers more meaningful insights than reacting solely to price swings.

The true intentions of institutions

BlackRock’s ongoing investments in RWA tokenization, BUIDL funds, and other areas demonstrate that this asset management giant’s long-term outlook on crypto remains unchanged. The single-day sell-off is just operational, not a strategic shift.

Summary

In the short term, the $718 million sell-off by institutions like BlackRock did put pressure on the market, with Bitcoin and Ethereum facing short-term selling. But from a broader perspective, this is mainly normal risk management activity rather than an institutional-level retreat.

Key facts include: the US spot Bitcoin ETF’s cumulative inflow remains over $1.7 billion, whales are accumulating during price dips, and institutions are still expanding into new areas like RWA. These all indicate that long-term institutional demand for crypto remains intact.

For investors, the long-term case for Bitcoin and Ethereum still hinges on adoption, network utility, and institutional interest. Short-term pullbacks are more about risk management rhythm shifts. In such volatility, focusing on data rather than emotions is a more rational approach.