Tuesday marked the largest single-day outflow from cryptocurrency exchange-traded funds (ETF) since their inception, with bitcoin’s loss exceeding US$500 million and Ethereum products shedding nearly US$400 million.
This comes after both cryptocurrencies reached record highs just last week, much of which was the result of ETF inflows.
According to Rachael Lucas, a cryptocurrency analyst at BTC Markets, the bleed suggests big investors are either locking in profits now or heading for the sidelines ahead of the Fed’s decision.
“Because spot ETFs require issuers to sell the underlying coins, these redemptions aren’t just paper moves, they hit order books directly, creating real selling pressure. That explains the spike in intraday volatility across BTC and ETH,” she said.
Lucas explained that while redemptions negatively impact prices and keep sentiment cautious in the short term, ETFs are now “too big to ignore” in the medium term – holding 6.5 per cent of bitcoin’s supply and 5.2 per cent of Ethereum’s market cap.
Additionally, the outflows indicate that conviction is wobbling more in Ethereum than in bitcoin, only a week after it surpassed US$4,600 for the first time.