Death Dive of Bitcoin and Ethereum ETF Could Be Temporary Setback Before Further Rise, Predict Experts
In a recent development, Bitcoin and Ethereum Exchange-Traded Funds (ETFs) have seen consecutive days of outflows, shedding a combined $1.9 billion in assets over the past three days. This marks the first time in more than four months that these cryptocurrency ETFs have experienced outflows concurrently.
The outflows in Bitcoin ETFs were around 1% of assets, while the highest volume US equity ETF saw around 2% of assets in outflows. IBIT, the largest crypto ETF, recorded 295 million in net outflows over the last two trading days, which is about 1.5% of the funds it has generated since April 7. This decline in BTC and ETH started last week, following a cooler-than-expected jobs report, and continued this week, with BTC falling below $112,500, its lowest mark since July 10, and Ethereum sinking to $3,380, its lowest level since the middle of the month.
However, analysts remain optimistic that these crypto-focused products will regain momentum. Bloomberg Senior ETF Analyst Eric Balchunas described the decline as "a breather" and remains bullish long-term. Zach Pandl, head of research for crypto fund manager Grayscale, believes that the outflows are consistent with pullbacks in financial markets as a whole.
Potential inflow catalysts for Bitcoin and Ethereum ETFs include institutional adoption, regulatory clarity, and growing product offerings. For Bitcoin ETFs, key catalysts are institutional inflows driven by major asset managers like BlackRock, the potential for spot Bitcoin ETFs to surpass gold holdings, and growth in the global money supply creating macroeconomic tailwinds.
For Ethereum ETFs, important inflow drivers are continued surge in institutional interest, the launch and performance of several spot Ethereum ETFs, growing adoption by corporate crypto treasuries, Ethereum-specific technological upgrades, and increased issuance of tokenized stocks and ETFs on Layer 2 networks.
Regulatory developments, such as the pending CLARITY Act and broader market structure legislation, also play a significant role in shaping the future of ETF inflows and price momentum, particularly for Ethereum.
Moreover, He predicts that the likely approval of staking ETFs could serve as a catalyst to further net inflows. Balchunas stated that one should tolerate up to 10% outflows and still be a happy camper. The outflows in crypto ETFs are comparatively small, according to Pandl.
The jobs report, the firing of the head of the government agency that compiles this data, and a fresh escalation of the Trump administration's global trade war contributed to the decline in BTC and ETH. However, the future of these cryptocurrency ETFs remains promising, with several potential inflow catalysts on the horizon.
- The Bitcoin and Ethereum Exchange-Traded Funds (ETFs) have seen consecutive days of outflows, shedding a combined $1.9 billion in assets over the past three days.
- IBIT, the largest crypto ETF, recorded 295 million in net outflows over the last two trading days, which is about 1.5% of the funds it has generated since April 7.
- Analysts remain optimistic that these crypto-focused products will regain momentum, with potential inflow catalysts including institutional adoption, regulatory clarity, and growing product offerings.
- For Bitcoin ETFs, key catalysts are institutional inflows driven by major asset managers like BlackRock, the potential for spot Bitcoin ETFs to surpass gold holdings, and growth in the global money supply creating macroeconomic tailwinds.
- For Ethereum ETFs, important inflow drivers are continued surge in institutional interest, the launch and performance of several spot Ethereum ETFs, growing adoption by corporate crypto treasuries, Ethereum-specific technological upgrades, and increased issuance of tokenized stocks and ETFs on Layer 2 networks.
- Regulatory developments, such as the pending CLARITY Act and broader market structure legislation, also play a significant role in shaping the future of ETF inflows and price momentum, particularly for Ethereum.
- The likely approval of staking ETFs could serve as a catalyst to further net inflows, according to Senior ETF Analyst Eric Balchunis.
