Investment in cryptocurrencies continues to draw attention, but recent data reveals an unexpected downturn for Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs). Last Friday, spot BTC and ETH ETFs faced net outflows as inflation data indicated increasing price pressures.
Inflation Fuels Outflows in Crypto ETFs
According to the Federal Reserve’s latest inflation report, the core Personal Consumption Expenditures (PCE) index rose by 2.9% on an annualized basis in July. This marks the highest increase since February and underscores the role of trade tariffs in driving up costs. For crypto enthusiasts, the market impact was swift, with Bitcoin ETFs experiencing a $126.64 million outflow—their first daily loss since August 22—while Ether ETFs reported a sizable $164.64 million outflow.
Notable funds recorded significant outflows: Fidelity’s FBTC saw withdrawals of $66.2 million, followed by ARK Invest and 21Shares’ ARKB ETFs with $72.07 million. On the other hand, BlackRock’s IBIT ETF posted a gain of $24.63 million, offering a glimmer of positivity amid the outflows.
The Role of Inflation and Tariffs
The Fed’s inflation report highlights growing concerns about the impact of tariffs implemented under former President Donald Trump. A baseline tariff of 10% on all imports and additional measures targeting specific sectors have increased import costs, driving inflation higher. Service-related prices rose by 3.6% year-over-year, despite energy costs remaining steady.
This inflationary pressure has left investors uncertain, with many speculating that the Federal Reserve could consider a rate cut in its next meeting. However, the central bank will also weigh labor market data as part of its decision-making process.
Ethereum ETFs Continue Corporate Adoption Trend
Despite recent setbacks, Ether ETFs have witnessed significant growth since their launch in July 2024. Net inflows rose 44% in August, reaching $13.7 billion from $9.5 billion in July. Analysts attribute this to renewed institutional interest and corporate treasury adoption of Ethereum.
Companies now hold approximately 4.4 million ETH—valued at over $19 billion—which represents 3.7% of total Ethereum supply. This trend highlights Ethereum’s emerging status as a viable asset for institutional portfolios. Fabian Dori, chief investment officer at Sygnum, stated, “Ethereum has recently experienced a significant revival in the recognition of both its adoption rate and value proposition.”
An Optimistic Outlook for Long-term Holders
While Bitcoin and Ethereum ETFs may face temporary headwinds, the long-term narrative remains optimistic for seasoned investors. The increased adoption of Ether by corporate treasuries and advancements in spot ETFs signal a growing confidence in the crypto sector.
For those interested in dipping into crypto investments, consider exploring crypto-related ETFs available through reputed companies like ETF.com. Staying informed with real-time market data can help potential investors navigate volatility and identify new opportunities in the evolving cryptocurrency market.
