The announcement of inflation data from the U.S. Federal Reserve on Friday led to significant outflows from Bitcoin ($108,720) and Ethereum exchange-traded funds. The data highlighted increasing price pressures under President Donald Trump's trade policies, resulting in net outflows of $164.64 million from Ethereum exchange-traded funds. This was the first decline after consecutive days of inflows exceeding $1.5 billion.
Outflows from exchange-traded funds (ETH) and (BTC)
Bitcoin's dedicated exchange-traded funds (ETFs) also experienced net outflows of $126.64 million, marking the first daily loss since August 22. The total assets under management for Ethereum fell from $4,401 to $28.58 billion, while total Bitcoin assets decreased to $139.95 billion. Fidelity's FBTC fund saw the largest daily outflow among Bitcoin ETFs, totaling $66.2 million, followed by ARK Invest's ARKA and ARKB funds with outflows of $72.07 million. Grayscale's GBTC fund recorded outflows of $15.3 million. Only a few funds saw minor inflows, as BlackRock's IBIT added $24.63 million, and WisdomTree's BTCW added $2.3 million.
These outflows coincided with the release of the Core Personal Consumption Expenditures (PCE) Index, the Federal Reserve's preferred inflation measure. The Core PCE Index rose by 2.9% year-on-year in July, reaching its highest level since February. Although this report aligned with expectations, CNBC indicates that Trump's tariffs have increased import costs, adding pressure to core prices. The Trump administration imposed a base tax of 10% on all imports, targeting additional categories with retaliatory measures.
Institutional treasury bonds boost demand for Ethereum exchange-traded funds
The instant Ethereum ETFs launched in July 2024 recorded a net inflow of 44% in August, rising from $9.5 billion to $13.7 billion. Analysts attribute this growth to a revival of institutional interest after a period of stagnation towards Bitcoin.
Institutional treasury bonds' adoption of Ether is accelerating. Companies currently hold 4.4 million Ether units, valued at approximately $19 billion, representing 3.7% of the total supply.
The connection between Trump's tariff fees and ETF flows is notable. The indirect effects of trade policies impacting cryptocurrency markets illustrate the interconnection between components of the global financial system.
Despite significant outflows from Ethereum exchange-traded funds, the long-term trend is positive, with an internal flow of 44% recorded in August. This indicates increasing institutional acceptance of Ethereum.
Additionally, despite the ongoing outflows from Grayscale's GBTC fund, it seems that investors prefer newer funds like IBIT due to cost and performance advantages.
In conclusion, despite short-term setbacks, institutional adoption of Ethereum and activity in the instant ETF market provide positive signals for long-term investors. Additionally, Ethereum's gaining a place in corporate treasury bonds enhances its potential for value appreciation in the future.
