Bitcoin and Ether ETFs See Massive Outflows After Inflation Shock
Digital asset ETFs hemorrhage billions as inflation data rattles traditional and crypto markets alike.
THE FALLOUT
Investors yank capital from Bitcoin and Ether exchange-traded funds at unprecedented rates following the latest inflation report. The outflows hit record levels as risk assets across all categories face brutal selling pressure.
MARKET REALITY CHECK
Even crypto's brightest stars can't defy macro gravity forever—turns out digital gold still tarnishes when the Fed starts swinging hammers. Another reminder that when Wall Street gets nervous, everything becomes a risk asset, even the ones supposedly designed as hedges.
The announcement of the US Federal Reserve’s inflation data on Friday led to significant outflows from spot Bitcoin
$108,586 and Ether ETFs. The data highlighted increased price pressures under President Donald Trump’s trade policies, resulting in a net outflow of $164.64 million from Ether ETFs. This was the first decline following consecutive days of inflows exceeding $1.5 billion.
ETH and BTC ETF Outflows
Bitcoin ETFs also saw a net outflow of $126.64 million, marking the first daily loss since August 22. The total assets under management for Ethereum
$4,393 fell to $28.58 billion, while Bitcoin’s dropped to $139.95 billion. The largest daily outflow among Bitcoin ETFs occurred in Fidelity’s FBTC fund with $66.2 million. It was followed by ARK Invest and 21Shares’ ARKB fund with a $72.07 million outflow. Grayscale’s GBTC fund witnessed an outflow of $15.3 million. Only a few funds experienced minor inflows, with BlackRock’s IBIT fund adding $24.63 million and WisdomTree’s BTCW fund adding $2.3 million.
These outflows coincided with the release of the core Personal Consumption Expenditures (PCE) index, which is the Fed’s preferred inflation gauge. The core PCE increased by 2.9% year over year in July, reaching its highest level since February. Although this report aligned with expectations, CNBC notes that Trump’s tariffs have increased import costs, adding pressure on core prices. The TRUMP administration imposed a basic 10% tax on all imports and targeted additional categories with retaliatory measures.
Institutional Treasuries Fuel Ether ETF Demand
Spot Ether ETFs, launched in July 2024, recorded a net inflow of 44% in August, rising from $9.5 billion to $13.7 billion. Analysts credit this growth to a resurgence of institutional interest following a period of stagnation against Bitcoin.
The adoption of Ether by institutional treasuries is accelerating. Companies currently hold 4.4 million ETH, valued at approximately $19 billion, accounting for 3.7% of the total supply.
The link between Trump’s tariffs and ETF outflows is notable. The indirect effects of trade policies reaching the crypto markets illustrate the interconnectivity of the global financial system.
Despite significant outflows from ethereum ETFs, the long-term trend is positive, with a 44% inflow recorded in August. This indicates growing institutional acceptance of Ethereum.
Additionally, despite ongoing outflows from Grayscale’s GBTC, investors appear to favor newer funds like IBIT due to cost and performance advantages.
In conclusion, despite short-term setbacks, the institutional adoption of Ethereum and activity in the spot ETF market provide positive signals for long-term investors. Ether securing a place in corporate treasuries reinforces its potential for future value appreciation.
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