Bitcoin, Ethereum ETFs See $2.6B Outflow Amid Market Plunge

According to data from Farside Investors, the period since October 29 has seen investors cash out a combined $2.6 billion from U.S. Bitcoin and Ethereum exchange-traded funds, marking one of the largest redemption periods in the funds’ relatively brief history. The Bitcoin ETFs bore the brunt of the selling pressure with over $1.9 billion in outflows, while Ethereum funds experienced $718.9 million in withdrawals. This represents the second major outflow event of 2024, following an eight-day streak in February that saw investors pull over $2.2 billion from Bitcoin ETFs following President Donald Trump’s tariff announcements.

The timing of these outflows coincides with increased market volatility and risk aversion among investors. Despite Trump’s generally pro-crypto rhetoric and policy positions, Bitcoin has suffered significant shocks alongside technology stocks in recent months, reflecting ongoing macroeconomic uncertainties. The approved spot BTC and ETH ETFs, which allow traditional investors and institutions to gain cryptocurrency exposure through standard stock exchanges, have become barometers for mainstream investor sentiment toward digital assets.

The massive ETF outflows have exerted substantial downward pressure on cryptocurrency prices. Bitcoin dropped below $100,000 for the first time since May, with CoinGecko data showing BTC recently trading at slightly over $103,428—up 2.6% on the day but still about 18% below its October record of $126,080. Ethereum showed similar volatility, changing hands for $3,439 with a more than 5% 24-hour jump, despite having plummeted by 13% over the past week. The second-largest digital coin by market capitalization has struggled to approach the record $4,946 it touched in August.

Financial advisor Ric Edelman, who heads the Digital Assets Council of Financial Advisors, offered perspective on the outflows despite the concerning headline numbers. “Looking at dollar flows distorts the picture,” Edelman told Decrypt. “The Bitcoin ETFs have collected more than $100 billion in assets, so while $2 billion in outflows sounds like a lot, it’s only 2%—hardly noteworthy.” He emphasized that the Bitcoin ETFs now manage a total of $145.4 billion in assets following their successful debut in January 2024, which represented the most successful launch in ETF history.

The crypto sell-off reflects broader risk aversion across financial markets. Investors have largely veered away from crypto and other risk-on assets since October amid multiple concerns: President Trump’s escalation of his trade war against China, the ongoing government shutdown, low market liquidity, and diminishing prospects of a third U.S. interest rate cut before year’s end. These macroeconomic headwinds have created a challenging environment for speculative assets despite the structural approval and growth of cryptocurrency investment vehicles.

Edelman highlighted a crucial development in market dynamics that distinguishes current conditions from previous crypto downturns. “What is noteworthy is that, despite these outflows, Bitcoin’s price hasn’t crashed,” he observed. “This is because of the strong institutional inflows that are simultaneously occurring. This wouldn’t have been the case 10, five or even two years ago, and shows the continuing maturity of this asset class.” This institutional participation provides a stabilizing counterbalance to retail investor outflows, suggesting the cryptocurrency market is developing the depth and resilience characteristic of more established asset classes.