Bitcoin ($BTC) and Ethereum ($ETH) exchange-traded funds (ETFs) in the US faced major outflows on Tuesday.
This marked their worst performance in weeks, as a total of $242.6 million was pulled from Bitcoin ETFs alone.
The outflows were likely linked to a sharp drop in Bitcoin prices, which was driven by growing conflict in the Middle East.
Bitcoin ETFs suffer heavy outflows
October started off with spot Bitcoin ETFs in the US seing significant withdrawals. According to data from SoSoValue, Fidelity’s FBTC fund had the largest outflows, with $144.67 million pulled from the fund.
This was followed by Ark and 21Shares’ ARKB, which recorded outflows of $84.35 million, marking its worst day since 27 August.
Other funds also saw significant losses. Bitwise’s BITB ETF reported net outflows of $32.7 million, while VanEck’s Bitcoin ETF lost $15.75 million.
Grayscale’s GBTC, the second-largest Bitcoin ETF by assets, experienced a $5.9 million outflow.
The only fund to buck the trend was BlackRock’s IBIT, which saw $40.84 million in inflows on the same day.
Despite these inflows, the overall trading volume of Bitcoin ETFs surged to $2.53 billion on Tuesday, up from $1.37 million on Monday.
These outflows coincided with a steep drop in Bitcoin prices, which fell by as much as 6%. This price drop followed news of escalating tensions between Israel and Iran.
Bitcoin’s price dropped to $60,300, erasing nearly all of the gains it made since the US Federal Reserve’s recent interest-rate cut.
Miners face revenue declines
In addition to ETF outflows, Bitcoin miners are also facing challenges. In September, Bitcoin miners earned approximately $816 million in block rewards, but this was significantly lower than in previous months.
The slowdown was especially notable in transaction fees, which had previously provided a boost to miner revenues.
This drop in miner revenue is affecting large publicly traded mining companies in the US. For example, Core Scientific, one of the leading Bitcoin miners, was the only major company to see its stock rise in September.
However, this increase came without the company reporting its financial results for the third quarter.
Over the past year, Core Scientific has earned $570 million, making it the highest revenue generator among publicly traded Bitcoin miners.
On the other hand, Marathon Digital Holdings (MARA) holds the highest retained earnings, with $450 million over the last year. Marathon, along with Hut 8, is also considered to have the most profitable operating margins.
These revenue trends among Bitcoin miners are of interest to mainstream investors and may influence future decisions in the ETF market.
Large withdrawals in Ethereum ETFs
Ethereum ETFs did not escape the wave of outflows on Tuesday. According to SoSoValue, these funds experienced withdrawals totalling $48.5 million, marking their worst day since 23 September.
Fidelity’s Ethereum Fund (FETH) led the losses, seeing $25 million in outflows on 1 October. This was the largest single-day outflow in the fund’s history.
Grayscale’s ETHE fund also saw significant outflows, losing $26.6 million, while Bitwise’s Ethereum ETF (ETHW) reported $0.9 million in withdrawals.
In total, US-based Ethereum ETFs saw $48.6 million in outflows across nine different funds.
Despite the overall trend, a few funds reported positive inflows. 21Shares’ Core Ethereum ETF (CETH) gained $1.2 million, while VanEck’s Ethereum ETF (ETHV) recorded inflows of $2.7 million. However, most other Ethereum ETFs remained unchanged.
Even though FETH experienced large outflows, it remains the second-largest Ethereum ETF by total assets, with $453.5 million in investments.
BlackRock’s iShares Ethereum Trust (ETHA) remains the leader, with more than $1.14 billion in assets as of 1 October.
Grayscale’s ETHE fund continues to face outflows, which are approaching $3 billion in total. This has resulted in a $572 million deficit in overall investments in US-based spot Ether ETFs.
The recent outflows from both Bitcoin and Ethereum ETFs come at a time of increased global uncertainty.
As tensions rise in the Middle East and Bitcoin mining revenues decline, the crypto market faces ongoing challenges that may affect future investment trends.
