Cryptocurrency ETFs Experiencing $290M Withdrawals Following Unexpected Inflation Surge
In a surprising turn of events, Bitcoin and Ethereum Exchange-Traded Funds (ETFs) have seen substantial outflows in recent days.
According to data, Grayscale's GBTC saw a notable exit of $15.3 million from its Bitcoin ETF fund. Fidelity's FBTC led the losses, with $66.2 million in withdrawals from Bitcoin ETFs. The largest investment company causing a significant outflow from its Bitcoin ETFs in recent days is BlackRock, with assets under management for Bitcoin ETFs now standing at $139.95 billion.
The Ethereum ETF sector also experienced a significant setback, with a net outflow of $164.64 million on Friday. This rise in outflows follows months of strong demand, and Ethereum ETFs had $164.64M in outflows, ending a 5-day streak. Assets under management for Ethereum ETFs have grown from $9.5 billion to $13.7 billion since their launch in July 2024, but they are now down to $28.58 billion.
The outflows from Bitcoin and Ethereum ETFs can be linked to the Fed reporting rising core inflation (2.9% in July). This increase is attributed to tariffs increasing import costs and service prices, driven by President Trump's trade policies.
Investors are debating whether Trump's tighter trade policies will push the Fed to act more aggressively to balance growth and inflation. Markets are still pricing in a potential Fed rate cut at the next meeting, especially if labor market data shows further weakness.
On a positive note, institutional adoption of Ethereum has accelerated, with corporate treasuries holding over 4.4 million ETH, worth over $19 billion. WisdomTree's BTCW brought in $2.3 million to Bitcoin ETFs, although these inflows were insufficient to offset the broader trend of withdrawals.
ARK Invest and 21Shares' ARKB recorded $72.07 million in outflows from Ethereum ETFs, while BlackRock's IBIT added $24.63 million to Ethereum ETFs.
Despite the recent sell-off, the market remains volatile, and it will be interesting to see how these trends unfold in the coming days.
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