Bitcoin ETFs See $859M Outflow Amid Tariff Panic

The bleeding reached its peak on Thursday, October 16, when Bitcoin ETFs collectively lost $530.9 million according to Farside Investors data. ARK 21Shares Bitcoin ETF (ARKB) led the exodus with $275.2 million in outflows, marking its steepest single-day capital flight since August 1 when the fund shed $327.9 million. The withdrawal pattern showed broad institutional retreat across major funds, with BlackRock’s IBIT losing $29.5 million, Fidelity’s FBTC dropping $132 million, and Grayscale’s GBTC shedding $45 million.

The week proved punishing for Bitcoin products overall, with only Tuesday breaking the outflow streak with a single day of inflows. The $858.7 million in net outflows represents one of the most significant institutional pullbacks since the spot Bitcoin ETFs launched earlier this year. According to Sean Dawson, Head of Research at Derive, ARKB’s outflows are particularly notable given the fund’s smaller holdings of approximately 50,000 BTC compared to BlackRock’s 800,000 and Fidelity’s 210,000 BTC.

Dawson noted that ARK’s fund sees ‘investors more frequently rotate in and out of BTC as a speculative asset’ compared to BlackRock and Fidelity’s vehicles, which house longer-term holders. This dynamic explains why ARKB consistently appears among the leaders during outflow days despite its smaller asset base, with the fund’s holdings maintaining consistently in the 40-50K BTC range since March 2024.

The massive ETF outflows come as markets continue to absorb shocks from President Donald Trump’s 100% tariff announcement on China last Friday, which triggered the largest liquidation event in crypto history. Within 24 hours, $19 billion in leveraged positions were wiped out, creating panic across cryptocurrency markets and traditional finance alike. The announcement sent ripples through global markets, with investors rapidly de-risking portfolios amid heightened geopolitical tensions.

Ganesh Mahidhar, Investment Professional at Further Ventures, told Decrypt that ‘there is a short-medium term shift, especially post the comments on last Friday towards a more risk-off state, especially given market exuberance across risk assets and uncorrelated assets over the last few months.’ The combination of the Ethereum-based USDe stablecoin’s depeg on Friday and a social media-driven boycott movement against Binance has pushed concerns about systemic risk back into focus, particularly at this stage of the post-halving Bitcoin cycle.

While China on Thursday nodded openness to trade talks while accusing the U.S. of creating ‘panic’ over Beijing’s rare earth export controls, the damage to market confidence had already been done. The potential off-ramp comes as both nations work toward a planned meeting between Trump and President Xi Jinping in South Korea later this month, though institutional investors appear to be taking a wait-and-see approach.

Market participants are now closely watching upcoming catalysts, particularly the Federal Reserve’s October 29 FOMC meeting and the ongoing Q3 earnings season. According to Mahidhar, ‘Market exuberance needs to be supported by revenue and cash flow growth in U.S. markets — if that happens and the FOMC meeting goes well, we may see a staunching in the bleed out.’ The combination of monetary policy uncertainty and earnings pressure has created a perfect storm for risk assets, including Bitcoin and cryptocurrency exposure.

The defensive institutional positioning reflects broader concerns about the sustainability of recent market gains across both traditional and digital assets. Bitcoin’s price action reflects this anxiety, with the cryptocurrency trading at $104,629 according to CoinGecko data, down 6.3% in the last 24 hours and still nursing losses from the tariff-triggered crash. The convergence of geopolitical tensions, monetary policy uncertainty, and technical factors has created one of the most challenging environments for Bitcoin ETFs since their inception.

Whether the Bitcoin ETF outflow streak continues depends heavily on how these macro factors resolve in the coming weeks. Institutional investors appear to be taking a cautious approach, reducing exposure to what many consider a speculative asset class until clearer signals emerge from both Washington policymakers and corporate earnings reports. The coming FOMC meeting in particular will be closely watched for any indications about the Fed’s appetite for rate cuts in the face of mounting geopolitical and economic pressures.