Key Takeaways:
- $291 Million Outflows: Spot Bitcoin and Ethereum ETFs saw a combined $291 million in outflows on Friday as inflation concerns surged.
- Trump Tariffs Fueling Inflation: New core inflation data rose 2.9% YoY, with Trump’s 10% import tariffs blamed for driving costs higher.
- Institutional Sentiment Shifting: Ethereum ETFs reversed after five days of inflows, highlighting growing market sensitivity to macroeconomic shifts.
A sharp spike in U.S. inflation is shaking up the crypto ETF market. On Friday, investors pulled nearly $300 million from Bitcoin and Ethereum ETFs following hotter-than-expected inflation data, raising fresh concerns over U.S. monetary policy under Donald Trump’s current trade regime.
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Spot Bitcoin and Ethereum ETFs See Major Outflows
Bitcoin and Ethereum spot ETFs were hit hard on Friday, with net outflows totaling $126.64 million and $164.64 million respectively, according to SoSoValue. This marked Ethereum’s first daily outflow after five consecutive days of inflows that added over $1.5 billion to its asset class.
The total assets under management (AUM) now stand at:
- Bitcoin: $139.95 billion
- Ethereum: $28.58 billion
Among Bitcoin ETFs, Fidelity’s FBTC led the losses with a $66.2 million outflow. It was followed by ARKB, managed by ARK Invest and 21Shares, which lost $72.07 million, and Grayscale’s GBTC, which saw $15.3 million exit.
Only a few funds managed to post modest inflows:
- BlackRock’s IBIT: +$24.63 million
- WisdomTree’s BTCW: +$2.3 million
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Inflation Data Sparks Concerns Over Rate Cuts
Core PCE Index Hits 2.9% – Highest Since February
Friday’s outflows came just hours after the Federal Reserve released the core Personal Consumption Expenditures (PCE) index, its preferred measure of inflation. The report showed a 2.9% year-over-year increase in July, the highest reading since February 2025.
While the figure aligned with expectations, its implications were far from reassuring. Rising inflation, particularly in core categories suggests that underlying price pressures are mounting, even as the broader CPI numbers remain somewhat contained by falling energy prices.
Trump Tariffs Drive Import Costs
Analysts have pointed to President Donald Trump’s trade policies as a major contributing factor. His administration has imposed a 10% baseline tariff on all imports, along with additional duties on specific goods, according to CNBC. Such tariffs are already trickling into the consumer economy since they are increasing the prices of imported goods and materials.
The increase in inflation occurs despite a decline in the prices of gasoline which had contributed to the relief of headline inflation. Conversely, service prices increased by 3.6% on a yearly basis, which shows that the demand side of the economy has been inflated in the key sectors of the economy such as housing, healthcare, and transportation.
Fed Rate Cut Still on the Table?
Markets continue to be pricing in a possible Fed rate cut, which may be dependent upon future labor data in the face of the inflation spurt. An already weakening employment market would further tilt the scales towards money easing in the next FOMC meeting, perhaps providing a momentary respite to risk assets, including crypto.
Ethereum ETFs: From Momentum to Pullback
One of the best stories in the crypto space since they were launched in July 2024 has been the performance of Ethereum ETFs. Even August recorded a net inflow of 44%, increasing in the value of inflows by $9.5 billion to $13.7 billion as a strong indication of renewed interest among institutional players.
Nonetheless, the sudden reversal on Friday highlights how much even larger groups of markets are subject to more macro-wide changes. These outflows of $164.64m a day not only wiped out new gains, but also underscored the fact that Ethereum is still regarded as an investment with greater risk when there is uncertainty.
Corporate Treasury Adoption Rising
Despite the recent drop, there are strong fundamentals underpinning Ethereum’s longer-term narrative. Corporate treasuries now hold over 4.4 million ETH, valued at more than $19 billion, according to StrategicETHReserve. This represents approximately 3.7% of total ETH supply.
“After an extended period of underperformance relative to Bitcoin and a souring investor sentiment, Ethereum has recently experienced a significant revival,” said Fabian Dori, CIO at Sygnum Bank. He pointed to the blockchain’s adoption rate and use-case diversity as key strengths.
