Bitcoin, Ethereum ETF Swoon Likely Temporary Blip Before Next Surge: Analysts

Bitcoin and Ethereum exchange-traded funds have experienced consecutive days of outflows concurrently for the first time in more than four months, shedding a combined $1.9 billion in assets, but two analysts say the drop-off after a big July is likely a temporary trend.

They attributed the outflows to investor concerns about the potential impact of tariffs and a cooling U.S. economy, and remain optimistic that these crypto-focused products will regain momentum, particularly with the likely regulatory approval of new altcoin-based products.

“The spot crypto ETPs are benefiting from a one-two punch of macro demand for Bitcoin and regulatory changes that will likely accelerate blockchain adoption,” said Zach Pandl, head of research for crypto fund manager Grayscale. “Both trends should continue in the second half of 2025 and beyond.” 

He added that the likely approval of staking ETFs could serve as a catalyst to further net inflows. 

Bloomberg Senior ETF Analyst Eric Balchunas called the decline “a breather,” and said that he remained “bullish long, long term.”

“I stick to this phrase–two steps forward, one step back,” he said. 

Spot Bitcoin ETF outflows have topped $1.25 billion over the past three days, while their recently torrid Ethereum counterparts have hemorrhaged more than $600 million since last Friday. Ethereum last posted outflows on July 2. 

It was the first time since a three-day period extending from the end of March into early April that investors simultaneously pulled more assets from both groups of funds than they invested in them on consecutive days. 

BTC fell below $112,500 at one point, its lowest mark since July 10, although it recovered some ground on Tuesday. ETH sank to $3,380, its lowest level since the middle of the month. 

Pandl noted that “there was evidence of froth in global markets in late July, including a surge in meme stock trading, high volumes in penny stocks, and tight credit spreads.” 

“Signs of slower growth in the U.S. economy cooled investor enthusiasm and triggered the latest drawdown across assets,” he said.

The two largest crypto assets have been declining since last week, following a cooler-than-expected jobs report, the firing of the head of the government agency that compiles this data, and a fresh escalation of the Trump administration’s global trade war.  

But Pandl said that the crypto exchange traded product outflows are consistent with pullbacks in financial markets as a whole and are “comparatively small,” noting that recent outflows of Bitcoin ETPs were around 1% of assets, whereas the highest volume US equity ETF saw around 2% of assets in outflows. 

Balchunas noted that the funds have received massive investments at an unprecedented pace, so the outflows were small relative to the size of the funds, particularly the BlackRock iShares Bitcoin Trust (IBIT), which alone now manages more than $70 billion in assets (AUM).  

 IBIT recorded 295 million in net outflows over the course of the last two trading days, about  1.5% of the funds it has generated since April 7. 

“You should tolerate up to 10% and still be a happy camper,” Balchunas said. “These [out]flows are nickel and dime compared to the haul it just took in. You have to anticipate little periods of outflows here and there because there’s people trading it and doing all sorts of stuff. If there’s a little sell off in the equity market that’s going to hit it.”