On August 29, against the backdrop of rising expectations for tightening U.S. monetary policy, the cryptocurrency market saw a flight to safety. The total net outflow from Ethereum (ETH) and Bitcoin (BTC) related exchange-traded funds (ETFs) that day reached $291.2 million, with ETH funds seeing a net outflow of $164.6 million and BTC funds a net outflow of $126.6 million, marking the largest single-day fund withdrawal since mid-August.
Ethereum ETF: Six-Day Inflow Surge Comes to a Halt
The fund flow for Ethereum ETFs has shown a dramatic reversal. Over the previous six trading days, ETH-related funds attracted a total of $1.89 billion in inflows, with an average daily inflow of $315 million, marking the longest inflow period since the second quarter of this year. However, the large outflow on August 29 nearly erased a third of this week's inflow gains.
From a product-specific perspective, Grayscale's Ethereum Trust (ETHE) saw a net outflow of $61.3 million that day, accounting for 37.2% of total outflows. As the world's largest over-the-counter Ethereum trust, ETHE manages assets totaling $14.2 billion, and its fund movements are viewed as an important barometer of institutional sentiment. Following closely is Fidelity's Ethereum Fund (FBTC-ETH), which experienced a single-day outflow of $51 million, the first time this product has seen a single-day outflow exceeding $50 million since its launch in March this year. Another ETH product from Grayscale (ETCG) and Bitwise's Ethereum ETF saw outflows of $28.6 million and $23.7 million, respectively, forming the second tier of fund withdrawals.
Notably, BlackRock's iShares Ethereum Trust (IBIT-ETH) maintained a balance in funds that day, contrasting with its steady net inflow trend since the beginning of this month — this product had accumulated $420 million in inflows by August 28, making it the only mainstream ETH fund not affected by this withdrawal wave, reflecting sustained trust from institutional investors in the BlackRock brand.
The reversal in fund flows is highly synchronized with the price movements of Ethereum. As of the close on August 29, ETH was priced at $4,442, down 6.75% from the previous week, marking the largest weekly decline since June. Technical indicators show that this price has fallen below the 20-day moving average, with short-term support levels facing tests.
Bitcoin ETF: Top Products Show Increasing Divergence
The Bitcoin ETF market is displaying a more complex pattern of differentiation. The net outflow of $126.6 million that day ended a streak of six consecutive days of net inflows since August 22, but different institutional products performed variably.
The ARKB Bitcoin ETF from 21Shares saw a net outflow of $72.1 million that day, becoming a hard-hit area for fund withdrawals. This product is known for its active management strategy, with a volatility rate 12% higher than passive products this year, making it more susceptible to selling during rising market risk aversion. Fidelity's Bitcoin Fund (FBTC) followed closely with an outflow of $66.2 million, with institutional clients accounting for 68%, reflecting traditional financial institutions' sensitivity to short-term volatility. Although Grayscale's GBTC recorded outflows of $15.3 million, the withdrawal scale has notably narrowed compared to its $26 billion AUM, indicating reduced selling pressure from long-term holders.
In stark contrast, BlackRock's IBIT Bitcoin ETF saw an inflow of $24.63 million that day, continuing its strong performance since its launch — this product has accumulated a net inflow of $12.7 billion since its launch in May, surpassing GBTC to become the industry leader. WisdomTree's BTCW also recorded a small inflow of $2.3 million, indicating that some funds are shifting from high-volatility products to more stable leading products.
In terms of price, Bitcoin closed at $108,783.89 that day, with a weekly decline of 5.32%, but rebounded slightly by 0.6% within 24 hours after the fund outflow announcement, indicating market technical support at the six-figure price level.
Macroeconomic Pressure: Federal Reserve Policy Becomes Key Variable
The timing of this fund outflow coincided closely with the release of U.S. core inflation data. The U.S. Department of Commerce reported on August 29 that the core Personal Consumption Expenditures (PCE) price index rose 2.9% year-on-year in July, exceeding market expectations of 2.7% and marking the highest value since February this year (3.0%). This data reinforced market expectations for the Federal Reserve to maintain high interest rates, with the CME FedWatch tool indicating that the probability of a 25 basis point rate hike in November surged from 28% before the data release to 41%.
As a typical risk asset, cryptocurrencies are significantly more sensitive to interest rates than traditional assets. Historical data shows that when the year-on-year growth rate of core PCE exceeds 2.5%, Bitcoin's weekly return is often below -3% (based on data from the last three years). The tightening expectations triggered by this inflation data have directly led to a reduction in risk asset allocation, with cryptocurrency ETFs being the first area to see institutional fund withdrawals.
Long-term Positioning: Ethereum Still Viewed Favorably
Despite short-term funding pressure, institutional confidence in Ethereum's long-term prospects remains strong. Ethereum co-founder Joseph Lubin recently reiterated at the Consensus 2024 conference: "ETH price has the potential to grow 100 times in the next decade, and the scale of decentralized applications in its ecosystem will reshape the paradigm of value storage." This view aligns with that of Fundstrat founder Tom Lee, who predicted in a recent report that Ethereum's deflationary mechanism and Layer 2 scaling solutions will push its market capitalization to surpass Bitcoin before 2028.
On-chain data indicates that institutional-level funds are undergoing cross-asset rebalancing. Blockchain analytics firm Lookonchain detected that a Bitcoin whale (holding address bc1q...x7f9) who had not moved their position since 2017 transferred 2,000 BTC (worth $217 million at the time) to the derivatives platform Hyperliquid on August 28 and exchanged it all for ETH spot. Such asset swaps by long-term holders have shown similar signs before the bull markets of 2019 and 2021.
Regarding short-term trends, AMBCrypto's quarterly outlook report notes that historically, Ethereum has significantly outperformed Bitcoin in the fourth quarter — over the past five years, the average return for ETH in Q4 has been 89%, while BTC has been 61%. Report author Michael van de Poppe predicts that if Ethereum successfully breaks through the resistance level of $4,800, it could trigger algorithmic trading's buying mechanism, pushing the price to challenge $10,000 within the year.
From a funding perspective, this ETH ETF outflow only represents 1.2% of its total managed size, far below the 5.3% weekly outflow ratio during the bear market in June 2022. Most analysts believe that the current fund withdrawal is more likely a tactical adjustment by institutions in the face of macro uncertainty rather than a strategic bearish outlook. With the maturity of the staking unlocking mechanism following Ethereum's Shanghai upgrade, as well as the continued expansion of the DeFi ecosystem, its long-term investment value remains included in the allocation framework of mainstream institutions.
