In Brief

• U.S. spot Bitcoin ETFs experienced net outflows of $228.6 million this past week, following a loss of $681.1 million the week prior.
• Outflows surpassed inflows on three out of five trading days, with Wednesday seeing the most significant drop of $261.4 million.
• This month, the funds have lost around $615 million so far, though cumulative net inflows since their launch still sit at $57.3 billion.

Bitcoin ETF investors are once again pulling back.

On Friday, U.S. spot Bitcoin ETFs reported a decline of $82.4 million, according to an ETF tracker. This week, inflows fell short of outflows on three trading days.

The funds lost a total of $228.6 million this week, as noted by SoSoValue, which follows a $681.1 million outflow the previous week. In total, about $910 million has exited the funds over these two weeks.

It was a volatile period. Following a $175.7 million inflow on Tuesday, Wednesday saw redemptions hitting $261.4 million, marking the worst day of the week. Although Thursday brought in a small inflow of $5.1 million, selling resumed on Friday.

On Wednesday, the selling aligned with a higher-than-expected inflation report. The consumer price index indicated a 3.7% year-over-year increase in prices for September, surpassing the forecast of 3.6%. A similar unexpected rise in producer prices followed on Thursday, which reignited discussion around potential Federal Reserve interest rate hikes.

On Thursday, Bitcoin temporarily dipped below $80,000, with roughly $950 million in leveraged crypto positions being liquidated within a day, predominantly from bullish longs. The drop also pushed Bitcoin’s price below the average estimated cost basis for ETF holders, which is around $82,300, as mentioned by Nexo analyst Iliya Kalchev.

When inflation is high, the Fed often continues to raise interest rates, which in turn elevates Treasury yields. This creates a very appealing risk-free return of about 5%, making it challenging for riskier investments like Bitcoin to compete. Elevated rates also increase borrowing costs and strengthen the dollar, impacting the accessible credit that leveraged crypto traders often rely on.

The back-to-back weeks of losses have seen October slide deeply into negative numbers. Initially, the funds began the month with around $293 million in inflows but are now down about $615 million. This downturn began earnestly on October 7, with a record $484.9 million in outflows marking the toughest day since June. Other crypto ETFs, such as those for Ethereum and Solana, have also faced downsides this month.

Spot Bitcoin ETFs are funds that hold actual Bitcoin and trade on stock exchanges like regular shares, providing investors with exposure through standard brokerage accounts without having to buy or store the asset directly.

Since their launch in January 2024, these funds have attracted $57.3 billion in net cumulative inflows, which make them a significant player in Wall Street’s crypto investment strategies. Daily flow reports from issuers make these numbers closely watched indicators of investor sentiment, especially as institutions and financial advisors make up a large portion of the investments.

Total net assets are reported at $104.29 billion by SoSoValue, though Decrypt’s tracker has it at $100.2 billion. Bitcoin finished Friday around $81,590, down from roughly $82,337 the previous week.