Spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) faced significant outflows on Friday, following the Federal Reserve’s latest inflation report, which revealed a hotter-than-expected rise in core prices. Analysts link the surge to President Donald Trump’s tariff policies, which have increased import costs and contributed to inflationary pressures.
Massive ETF Withdrawals Amid Inflation Concerns
According to SoSoValue data, Ethereum ETFs saw net outflows of $164.64 million, snapping a five-day streak of inflows that previously added more than $1.5 billion to the asset class. Bitcoin ETFs also turned negative, posting $126.64 million in outflows, marking their first daily loss since Aug. 22.
- Total AUM after outflows:
- Ethereum ETFs: $28.58 billion
- Bitcoin ETFs: $139.95 billion
Among Bitcoin funds, Fidelity’s FBTC led with a $66.2 million withdrawal, followed by ARK Invest and 21Shares’ ARKB with $72.07 million. Grayscale’s GBTC lost $15.3 million, while only a few funds, such as BlackRock’s IBIT (+$24.63 million) and WisdomTree’s BTCW (+$2.3 million), managed to post gains.
Fed Data Shows Inflation Accelerating
The core Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation gauge — climbed 2.9% year-over-year in July, the highest since February. The increase was in line with forecasts but highlights inflationary pressure from Trump’s new trade tariffs.
The Trump administration imposed a baseline 10% tariff on all imports, alongside targeted reciprocal duties, raising import costs and driving core prices higher. While energy prices offered some relief, service sector inflation jumped 3.6% annually, adding to concerns.
Related : Core PCE Inflation Matches Forecast in July at 0.3%
Rate Cuts Still on the Table
Despite the inflation uptick, markets still anticipate a Fed rate cut at the next meeting, contingent on labor market data showing further weakness. Analysts suggest this could support risk assets in the medium term, but short-term volatility is expected for crypto ETFs.
Despite Friday’s outflows, Ethereum ETFs have seen strong adoption since their July 2024 launch, with net inflows rising 44% in August, from $9.5 billion to $13.7 billion. Corporate treasuries now hold 4.4 million ETH worth $19 billion, representing 3.7% of total supply, signaling rising institutional confidence.
According to Sygnum CIO Fabian Dori,
“After a period of underperformance relative to Bitcoin, Ethereum has recently experienced a significant revival in recognition of both its adoption rate and value proposition.”
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.