Key Points
- Bitcoin ETFs have experienced record outflows of $242.6 million due to rising geopolitical tensions.
- Ethereum ETFs also saw a decline, with outflows totaling $48.6 million as of October 1st.
Bitcoin ETFs See Record Outflows
Exchange-traded funds (ETFs) for Bitcoin experienced a significant reversal after a period of strong inflows. On September 27th, inflows reached $494.4 million but by October 1st, eleven U.S. spot Bitcoin ETFs saw a collective outflow of $242.6 million—the largest in nearly a month. Fidelity’s FBTC was one of the most affected, accounting for $144.7 million in outflows. Other losses included the ARK 21Shares’ ARKB, with $84.3 million withdrawn, and Bitwise’s BITB, which saw a $32.7 million exit. Conversely, BlackRock’s IBIT saw a positive influx of $40.8 million, marking its 15th consecutive day without outflows.
The Cause of the Decline
The recent downturn in Bitcoin and cryptocurrency markets can be largely attributed to escalating tensions between Israel and Iran. Iran’s missile strikes in retaliation for Israel’s actions against Hezbollah have fueled market uncertainty, leading to significant sell-offs. This conflict has previously caused Bitcoin to drop over 8%, and with the current situation potentially worsening, the potential for further negative impacts on the crypto market is high.
Ethereum ETFs Follow Suit
Ethereum ETFs also experienced a notable decline, similar to Bitcoin ETFs. As of October 1st, cumulative outflows for Ethereum ETFs totaled $48.6 million. Grayscale’s ETHE led the charts with the highest outflow of $26.6 million, followed by Fidelity’s FETh and Bitwise’s ETHW, which saw outflows of $25 million and $9 million, respectively. However, 21Shares’s CETH and VanEck’s ETHV bucked the trend, posting inflows of $1.2 million and $2.7 million, respectively.
Geopolitical Tensions Impact the Entire Cryptocurrency Market
The escalating tensions in the Middle East have had repercussions beyond ETFs, affecting the entire cryptocurrency market. The global crypto market cap fell to $2.17 trillion, facing a decline of 4.10%. Bitcoin’s value dropped over 3%, while Ethereum saw a sharper decline of more than 6% in just 24 hours. In contrast, traditional commodities like gold and crude oil experienced significant gains; gold prices rose by 1.4%, reaching $2,665 per ounce, close to an all-time high, while crude oil prices surged nearly 7%, hitting $72 per barrel. Additionally, both bonds and the U.S. dollar strengthened following Iran’s missile strikes targeting Israel on October 1st, highlighting the broader market volatility amid geopolitical unrest.