Bitcoin and Ether ETFs Experience Withdrawals Amid Federal Reserve Inflation Warning

Spot Bitcoin and Ether ETFs experienced outflows on Friday as the Federal Reserve published crucial inflation data indicating that price pressures are rising under President Donald Trump’s trade policies.

As per SoSoValue data, Ether (ETH) ETFs recorded a net outflow of $164.64 million, reversing a streak of five consecutive days of inflows that had contributed over $1.5 billion to the asset class.

Bitcoin (BTC) ETFs also faced a setback with net outflows of $126.64 million, marking their first daily loss since Aug. 22. The total assets under management fell to $28.58 billion for Ethereum and $139.95 billion for Bitcoin.

Fidelity’s FBTC experienced the largest single-day outflow at $66.2 million among Bitcoin ETFs. Following closely, ARK Invest and 21Shares’ ARKB noted a $72.07 million net withdrawal, while Grayscale’s GBTC saw $15.3 million exit. Only a handful of funds reported modest inflows, with BlackRock’s IBIT gaining $24.63 million and WisdomTree’s BTCW adding $2.3 million.

Related: 92 crypto-related ETPs in progress: ‘Floodgates to open soon’

Fed announces higher-than-anticipated core inflation

The outflows coincided with the announcement of the Fed’s preferred inflation measure, the core Personal Consumption Expenditures (PCE) index, which showed a 2.9% annualized increase in July, reaching the highest level since February.

The report, aligning with expectations, surfaced amid rising indications that Trump’s tariff policies are exacerbating core prices by inflating import costs, as reported by CNBC.

Trump’s administration has implemented a baseline 10% tariff on all imports and targeted additional areas through reciprocal duties. While energy prices have helped keep overall inflation in check, service costs surged 3.6% year-over-year.

Even with the uptick in inflation, the market continues to anticipate a Federal Reserve rate cut during its next meeting, especially if labor market data reveals further weaknesses, according to CNBC.

Related: US ETFs now a significant source of Bitcoin spot trading volume

Ether ETFs rise as corporate treasury demand grows

Since their inception in July 2024, Ether spot ETFs have consistently gained traction, with net inflows increasing by 44% in August, from $9.5 billion to $13.7 billion. Analysts attribute this growth to a resurgence in institutional interest following a period of lagging performance compared to Bitcoin.

Adoption of Ether by corporate treasuries is also on the rise. Companies currently hold 4.4 million ETH, worth over $19 billion, representing approximately 3.7% of the total supply, according to StrategicETHReserve.