Crypto Funds Hit With $1.3B Withdrawals as Market Sentiment Shifts

TLDR

• Crypto funds faced withdrawals totaling $1.3 billion over three consecutive days.
• Bitcoin ETFs recorded $523 million in outflows on Tuesday after rising fourfold from Monday.
• Ether ETFs doubled their losses to $422 million in one day.
• Fidelity and Grayscale reported the largest withdrawals across both Bitcoin and Ether funds.
• BlackRock ETFs saw minimal or no outflows compared with other issuers.

Crypto funds recorded sharp outflows on Tuesday as both Bitcoin and Ether ETFs lost significant investor capital. Bitcoin ETFs witnessed $523 million in outflows, while Ether ETFs saw $422 million exit in one day. Combined, these moves pushed three-day crypto funds withdrawals to $1.3 billion, reflecting weakening sentiment.

Bitcoin ETFs Record Heavy Withdrawals

Spot Bitcoin ETFs registered their second-largest outflows this month, escalating concerns about declining investor appetite. According to Farside Investors data, outflows surged more than fourfold compared with Monday’s withdrawals. The total losses reached $523 million, aligning with Bitcoin’s recent 8.3% price decline.

Fidelity Investments led these losses with outflows of $247 million from its Fidelity Wise Origin Bitcoin Fund. Grayscale Investments also reported $116 million in withdrawals from its Grayscale Bitcoin Trust ETF. However, BlackRock’s iShares Bitcoin Trust ETF saw no outflows, contrasting with peers.

Crypto funds linked to Bitcoin have therefore lost substantial ground during three straight sessions of exits. Although investors shifted sharply, ETF analysts have not yet issued formal responses. Market participants remain alert as further losses could reshape fund allocation strategies.

Ether ETFs Suffer Doubling Outflows

Ether ETFs endured severe outflows as investor pressure intensified across crypto funds. Losses doubled in a single day, rising from $200 million on Monday to $422 million on Tuesday. Ether price also corrected 10.8% since last Wednesday, amplifying market unease.

Fidelity’s Ethereum Fund recorded $156 million in withdrawals, highlighting its role in the downturn. Grayscale’s Ethereum Trust followed with $122 million in outflows, reinforcing the selling pressure. BlackRock’s iShares Ethereum Trust ETF posted comparatively minor losses of $6 million.

Senior Bloomberg analyst Eric Balchunas noted that Ether ETFs outpaced Bitcoin ETFs in July. He credited Thomas Lee and stablecoin legislation with driving Ether’s appeal. Balchunas added that BitMine’s ETH treasury strategy, led by Lee, further strengthened Ether’s profile.

Investor Sentiment Turns as Crypto Funds Weaken

The Crypto Fear & Greed Index turned to “Fear” with a reading of 44, reflecting a sudden sentiment shift. This came after months of optimism that buoyed both Bitcoin and Ether ETFs. Analysts cautioned that the rapid swing demonstrates sensitivity in investor behavior.

Ryan Park, adviser at 21Rates, argued the outflows do not signal abandonment. “A few daily ETF outflows doesn’t mean TradFi is abandoning crypto,” Park wrote on X. He emphasized that investors still use ETFs as tools to enter and exit positions quickly.

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