Bitcoin News Today: Investor Fears Fuel $1.3B Exodus from Bitcoin and Ether ETFs

Bitcoin and Ether Funds See Heavy Outflows as Market Sentiment Turns

Bitcoin and Ether funds experienced significant outflows in recent days, signaling a shift in investor sentiment and raising concerns about the sustainability of the recent bullish trend. According to Farside Investors data, U.S. spot Bitcoin ETFs recorded $523 million in outflows on Tuesday, a sharp increase from the previous day and the second-largest outflow for the month [3]. Ether ETFs also saw major losses, with outflows doubling to $422 million on Tuesday, up from $200 million on Monday [3]. The combined outflows over three consecutive days totaled nearly $1.3 billion for both asset classes [3].

The outflows coincided with sharp price corrections for both cryptocurrencies. According to CoinGecko, Bitcoin dropped 8.3%, while Ether fell 10.8% since last Wednesday [3]. This decline has led to growing concerns among investors, reflected in the recent shift in the Crypto Fear & Greed Index, which moved to a "Fear" rating with a score of 44, indicating growing caution after a month of optimism [3]. The outflows suggest a reallocation of capital within the crypto market, as investors reassess exposure to both Bitcoin and Ether.

Spot Ether ETFs, which had been gaining ground against their Bitcoin counterparts, also posted major outflows. On Monday, Ether ETFs saw $196.7 million in outflows, the second-largest on record since their launch, with BlackRock’s ETHA fund alone losing $87 million [1]. This marked a reversal from earlier trends, where Ether ETFs had attracted a larger share of inflows compared to Bitcoin ETFs. According to data from Hildobby, the ratio of ETH supply in ETFs had reached 5%, outpacing Bitcoin’s 6.4% [1]. However, the recent outflows suggest a potential slowdown in the momentum behind Ether ETFs.

Fidelity and Grayscale were the largest contributors to the outflows. Fidelity’s Ethereum Fund (FETH) alone reported $272 million in outflows last Friday and an additional $156 million in outflows on Tuesday [3]. Grayscale’s Ethereum Trust (ETHE) also lost $122 million [3]. Similarly, Fidelity’s Bitcoin Fund (FBTC) reported $247 million in outflows on Tuesday, while Grayscale’s Bitcoin Trust (GBTC) lost $116 million [3]. In contrast, BlackRock’s iShares Bitcoin Trust ETF (IBIT) did not report any outflows during this period [3].

The outflows come amid rising Ether unstaking activity, with the Ethereum validator exit queue reaching an all-time high of 910,000 ETH, valued at $3.9 billion [1]. This surge in unstaking reflects growing investor uncertainty and the potential for further price declines. Some market observers have warned of a looming “unstakening,” where Ether’s value could fall significantly relative to Bitcoin. Analysts have highlighted that Ether’s price has already dropped to 0.036 BTC from higher levels in recent months, and some predict it could fall further [1].

The sustainability of the recent ETF inflows, which had fueled Bitcoin’s climb above $120,000 earlier in the summer, now appears in question. Glassnode reported that while spot Bitcoin ETFs recorded $880 million in inflows last week, this trend was not matched by strong on-chain activity [4]. Analysts caution that the market remains highly dependent on institutional capital flows to maintain momentum. Despite the recent outflows, Bitcoin’s price reaction has been relatively muted, dropping only 3.8% over the same period [4]. This suggests that liquidity remains available, possibly through stablecoin reserves on exchanges.

Source:

[1] Spot Ether ETFs See $197M Outflows, Second-Largest Ever (https://cointelegraph.com/news/ether-etfs-197m-outflows-second-largest)

[2] ETH ETFs Post Second-Worst Day Ever with Nearly $200M (https://www.bitcoinsensus.com/news/business/eth-etfs-post-second-worst-day-ever-with-nearly-200m-in-outflows)

[3] Crypto funds bleed: Bitcoin and Ether ETFs shed nearly $1B (https://cointelegraph.com/news/crypto-funds-bleed-bitcoin-outflows-surge-5x-ether-outflows-double)

[4] Over $500 Million In Outflows From Bitcoin ETFs (https://www.benzinga.com/crypto/cryptocurrency/25/08/47230626/over-500-million-in-outflows-from-bitcoin-etfs-what-does-it-mean-for-the-bull-market)