ETH and BTC ETF Outflows: $291M Exit Amid Inflation Fears
The cryptocurrency ETF landscape experienced a significant shift last week, marking a reversal of the positive trend seen earlier in August. A combined $291 million flowed out of US-based Ethereum and Bitcoin ETFs on Friday, raising concerns among investors.
Ethereum ETFs Take a Hit
Ethereum ETFs led the retreat, with outflows totaling $164.64 million. This includes substantial withdrawals from major players like Fidelity’s FETH ($51 million), Bitwise’s ETHW ($23.7 million), and Grayscale’s ETHE and ETH ($28.6 million and $61.3 million respectively). BlackRock, 21Shares, VanEck, Invesco, and Franklin Templeton Ethereum ETFs, however, saw no significant changes.
This abrupt reversal ended a six-day inflow streak that had added approximately $1.876 billion to the total assets under management (AUM) for Spot Ethereum ETFs. The AUM for Spot Ethereum ETFs now stands at $28.58 billion.
Bitcoin ETFs Follow Suit
Spot Bitcoin ETFs also experienced their first daily decline since August 22nd, with $126.64 million in outflows. Fidelity’s FBTC saw the largest outflow at $66.2 million, followed by ARKB ($72.07 million) and GBTC ($15.3 million). However, not all issuers experienced negative flows; BlackRock’s IBIT saw inflows of $24.63 million, and WisdomTree’s BTCW saw inflows of $2.3 million.
The AUM for Spot Bitcoin ETFs has fallen to $139.95 billion.
Inflation Concerns Drive Outflows
The sudden reversal in ETF flows is largely attributed to the release of July’s US core Personal Consumption Expenditures (PCE) index. The index’s 2.9% year-over-year increase, the fastest pace since February, fueled concerns that the Federal Reserve may delay rate cuts, prompting institutional investors to take a cautious stance.
What Lies Ahead?
The coming week will be crucial in determining the future trajectory of ETF flows. Persistent inflation could lead to further withdrawals, while signs of cooling inflation might see inflows resume, particularly for Ethereum ETFs, which benefit from strong underlying fundamentals.
Bitcoin’s price action will also be key. Maintaining a price above $110,000 could boost confidence, while a drop below could signal further weakness. For Ethereum, closing above $4,500 would reinforce bullish sentiment, while a drop below $4,400 could indicate further declines.
At the time of writing, Bitcoin is trading at $109,910 and Ethereum is at $4,470.