Bitcoin ETFs See $196M in Outflows as Stagflation Fears Mount; Ether Funds Gain $73M Amid Regulatory Clarity
U.S.-listed spot bitcoin exchange-traded funds (ETFs) recorded $196 million in net outflows on Tuesday, marking the fourth consecutive day of redemptions as concerns over stagflation weighed on investor sentiment across risk assets.
The outflows were led by Fidelity’s FBTC and BlackRock’s IBIT, according to data from SoSoValue. Since Thursday, the cumulative net outflow across the 11 listed ETFs has reached nearly $1.46 billion — the longest stretch of withdrawals since April.
The latest round of selling followed the release of the U.S. ISM Non-Manufacturing PMI, which signaled deteriorating service sector conditions. The report pointed to rising inflation, softening employment, and trade disruptions — a mix that reignited fears of stagflation, typically considered a worst-case macro scenario for risk-sensitive assets such as equities and cryptocurrencies.
Bitcoin (BTC) slipped more than 1% to a low near $112,650 before recovering to trade around $114,000. The Nasdaq Composite fell 0.7%, erasing Monday’s gains, as tech stocks mirrored crypto’s weakness.
“Services employment is contracting, prices are rising, and activity is barely expanding — classic stagflation,” analysts at LondonCryptoClub wrote on X. “This is toxic for risk if it limits the Fed’s ability to cut rates into a slowdown.”
Despite the risk-off environment, interest rate markets are increasingly pricing in Fed policy easing. Bloomberg data shows SOFR-linked options now imply potential rate cuts at all three remaining FOMC meetings this year, totaling up to 75 basis points by year-end.
LondonCryptoClub believes weakening labor and growth signals will likely push the Fed to begin easing by September.
Ether ETFs Attract $73M as Staking Clarity Lifts Sentiment
In contrast to BTC funds, ether (ETH) ETFs saw renewed investor demand, with $73.22 million in net inflows — snapping a two-day losing streak.
The rebound comes after the SEC issued new guidance clarifying that, under certain conditions, staking and token rewards do not constitute securities offerings. The update appears to have removed a key regulatory overhang for ETH-related investment products.
“The SEC’s position clears the path for spot ether ETFs to move forward, though likely without staking components,” said Nate Geraci, president of NovaDius Wealth Management.
Industry observers see the regulatory clarity as a positive catalyst that could support ETH adoption in institutional portfolios, especially as ETF issuers prepare for potential product approvals.
