BTC, ETH ETFs hemorrhage $291M triggered by US inflation data

Spot Bitcoin and Ether ETFs saw steep outflows on Friday as fresh U.S. inflation numbers rattled investor confidence. The outflows amounted to $291.28 million, a striking reversal of sentiment following weeks of inflows. 

Ether ETFs led outflows, losing $164.64 million, SoSoValue reported. That snapped a stretch of five straight sessions of inflows that had added over $1.5 billion to the asset class. Bitcoin ETFs also saw outflows, losing $126.64 million in their first daily decline since Aug. 22.

The drawdown drove a decline in assets under management (AUM) across the industry. Ethereum ETF assets under management dipped to $28.58 billion, and Bitcoin ETF AUM to $139.95 billion.

Data from individual funds underscored the magnitude of the exodus. Fidelity’s FBTC topped the outflows list, with $66.2 million. The ARKB from ARK Invest and 21Shares was next up, with outflows of $72.07 million. GBTC by Grayscale registered an outflow of $15.3 million.

Not all funds bled capital. BlackRock’s IBIT took in an estimated $24.63 million in inflows. WisdomTree’s BTCW inched to $2.3 million, showing that some investors were still in the mood to take advantage of the turbulence.

Market wary as Fed inflation gauge lifts dollar

The heavy outflows in the Bitcoin and Ether ETFs came as the U.S. published new inflation data that caught investors’ eyes. The central bank’s favored measure of underlying inflation, the core Personal Consumption Expenditures (PCE) index, increased 2.9% year-over-year in July, the fastest pace since February.

The figure aligned with economists’ estimates but reinforced that inflation pressures are proving sticky. The figure also comes as the Fed is pressured to follow through on long-awaited rate cuts.

Looking closer at the report, energy prices offered some relief by partially offsetting overall increases. However, the services sector told a different story. Service costs surged 3.6% year-over-year, reflecting sustained demand and rising wages. Economists warn that this type of inflation is usually harder to control.

Compounding the pressure are rising import costs associated with President Donald Trump’s tariffs. The administration put in place across-the-board 10% tariffs and added duties on specific goods. Though meant to support domestic output, these steps have also raised the cost of a wide range of everyday products for American companies and consumers.

For investors, the report came at an opportune moment. Markets have been betting the Fed will cut interest rates in September to help keep growth going. But with inflation remaining stubborn, traders aren’t so sure. A cooler job market or softening job data in the weeks ahead could push the Fed toward easing policy. On the flip side, stubbornly high prices could delay action and prolong tighter financial conditions.

Analysts warn that the Federal Reserve is walking a tightrope. One strategist told MarketWatch that the central bank’s biggest concern, with inflation trending upward, is cutting rates too early and triggering another price spike. The strategist added that the Fed did not want to keep rates elevated for too long, which could choke off economic growth.

Ethereum adoption is still showing momentum

Despite market fluctuations, outflows from Ether ETFs have remained limited since their July 2024 launch. Inflows surged 44% month-on-month, rising from $9.5 billion to $13.7 billion, driven primarily by institutional investors and corporate treasuries.

Companies now collectively hold around 4.4 million ETH, valued at over $19 billion—approximately 3.7% of total issuance, according to StrategicETHReserve. This growing adoption has bolstered confidence in Ethereum’s role as a long-term store of value and a key asset for corporate balance sheets.

Fabian Dori, chief investment officer at Swiss crypto bank Sygnum, said we are finally seeing the adoption and recognition of Ethereum’s value proposition after prolonged underperformance compared to Bitcoin and weak investor sentiment.

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