Crypto Market Trembles: Bitcoin and Ethereum ETFs Face Near-$1 Billion Outflow Amid Macro Uncertainty

The cryptocurrency market experienced a significant shake-up this week as U.S. spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs) witnessed a massive “capital exodus.” A staggering net outflow approaching $1 billion in a single day underscored a defensive shift among institutional investors, prioritizing risk reduction amidst heightened macroeconomic uncertainty and global financial volatility.

Institutional Flight: Bitcoin ETFs Lead the Outflow

Data from SoSoValue revealed that all 12 U.S. spot Bitcoin ETFs recorded a net outflow of $708.7 million on Wednesday, marking the largest single-day withdrawal in nearly two months. Leading the charge was BlackRock’s IBIT, which saw $356.6 million flow out, closely followed by Fidelity’s FBTC with a net outflow of $287.7 million. Four other Bitcoin ETFs also reported significant capital withdrawals.

Ethereum ETFs Under Pressure

Ethereum spot ETFs were not immune to the pressure. A collective net outflow of $286.9 million was observed across five funds on Wednesday. BlackRock’s ETHA bore the brunt, accounting for a substantial $250.3 million of the single-day outflow. While three other Ethereum ETFs also faced withdrawals, Grayscale’s Ethereum Mini Trust (ETH) bucked the trend with a modest inflow of $10 million.

“Defensive Deleveraging” in Action

Rachael Lucas, a cryptocurrency analyst at BTC Markets, characterized the event as a classic move:

“Wednesday’s capital withdrawal is typical ‘defensive deleveraging.’ When the macroeconomic environment deteriorates—whether due to rising interest rates, geopolitical conflicts, or surging volatility—institutions typically adjust high-beta assets like cryptocurrencies first.”

Price Impact and Macro Headwinds

The substantial capital exit coincided with a noticeable weakening in the prices of both Bitcoin and Ethereum, which dipped to $87,000 and $2,872 respectively. This downturn was largely attributed to escalating U.S.-Europe tensions and significant volatility in the Japanese government bond market, which collectively fueled a pervasive risk-off sentiment across global markets.

Signs of Stabilization and Crypto Resilience

However, the market soon showed signs of recovery. Reports emerged that former U.S. President Donald Trump had reached an agreement with NATO regarding Greenland and decided against imposing additional tariffs on EU countries in February. This news helped assuage fears of escalating trade conflicts, injecting a dose of optimism back into the market.

As risk sentiment began to warm, Bitcoin rebounded to trade around $89,000, while Ethereum stabilized near the $3,000 mark. Vincent Liu, CIO of Kronos Research, commented on the market’s fortitude, stating, “Despite the unfavorable macroeconomic environment, cryptocurrencies have shown relatively strong resilience after the shakeout.”

Long-Term Perspective and Niche Asset Shift

Rachael Lucas further emphasized that a single day’s large outflow is unlikely to derail the long-term trend. She highlighted that U.S. Bitcoin spot ETFs still boast over $116 billion in total Assets Under Management (AUM) and have accumulated more than $56 billion in net inflows since their inception.

Intriguingly, amidst the outflows from Bitcoin and Ethereum, smaller spot ETFs for Ripple (XRP) and Solana (SOL) recorded net inflows of $7.16 million and $2.92 million, respectively. This trend suggests a strategic reallocation by some institutional capital, moving from mainstream cryptocurrencies towards niche assets that offer specific narratives or are less crowded, indicating a tactical shift in portfolio construction.