In Brief
- •Spot ETFs of Bitcoin and Ethereum recorded over $1.7 billion in withdrawals in a single week.
- •This reversal marks a break with the upward trend seen in recent weeks on institutional crypto products.
- •Massive outflows are fueled by persistent inflation, global economic slowdown, and monetary uncertainty in the United States.
- •At the same time, a rotation of capital towards other crypto ETFs (notably Solana and XRP) is emerging.
A Break in the ETF Momentum
Bitcoin and Ethereum ETFs listed in the United States experienced a sudden halt last week.
Indeed, products backed by bitcoin recorded $903 million in net outflows, while Ethereum ETFs suffered withdrawals of $796 million, their largest weekly outflow since launch.
This withdrawal marks the end of a series of monthly inflows that until now reflected a renewed institutional confidence, according to SoSoValue figures.
This wave of withdrawals occurs in a critical economic context, where macroeconomic warning signs multiply. Several converging factors explain this institutional withdrawal movement :
- •Persistent inflation in the United States, which maintains uncertainty over future Federal Reserve (Fed) interest rate decisions;
- •A global growth slowdown, notably visible in downward revisions of economic forecasts;
- •A rise in volatility on risky assets, with cryptos historically being the first hit during risk reduction phases;
- •The simultaneous drop of bitcoin and Ethereum, each losing more than 8 % over the week, contributing to accelerate withdrawal movements.
These elements have led many funds to adopt a more defensive stance, reducing their exposure to cryptos, considered too sensitive in the current environment. While this shift is not unexpected, it contrasts with the bullish momentum observed over several weeks.
Towards selective diversification of crypto exposures
Beyond the observed retracement on Bitcoin and Ethereum ETFs, the market appears to be witnessing a redeployment of capital towards other crypto products. Capital is redirecting towards new ETFs linked to Solana and XRP, revealing a shift towards more targeted diversification within the crypto sphere.
While outflows from BTC and ETH can be seen as a disengagement, this flow rotation indicates it is more of a repositioning than an abandonment of the ecosystem.
This trend reflects a change in how institutional investors approach managing their exposure to these assets. Ethereum products, historically second behind bitcoin, are not exempt from strategic realignment.
Institutional allocators, who viewed these products as a practical gateway to cryptos, are today reconsidering their strategies. In a market that has become more selective, the appeal of alternative tokens is explained by the search for timely opportunities, such as recent technological advances or the community dynamics of certain projects.
In the medium term, this reshaping of the landscape could permanently modify the hierarchy of institutional crypto products. Although bitcoin and Ethereum maintain their status as market pillars with a capitalization beyond $4,000 billion, their dominance in institutional portfolios is now challenged by an increasingly structured global offering.