$741 Million Pulled From Crypto ETFs as Inflation Fears Spike

Investors are pulling back from U.S.-listed spot Bitcoin (BTC) and Ether (ETH) ETFs amid macroeconomic uncertainty, with combined withdrawals totaling a staggering $741 million on Wednesday alone.

Bitcoin ETFs recorded a net outflow of $582 million, making it the second-largest exodus since these vehicles launched just a year ago. Fidelity’s FBTC fund saw its largest-ever withdrawal of $258 million, followed by BlackRock’s IBIT, which shed $124 million.

Meanwhile, Ether ETFs saw their largest outflow since July 2024, losing $159.3 million.

The outflows come as U.S. inflation fears and bond market volatility weigh on risk assets, including cryptocurrencies. Over the past three days, Bitcoin’s price has dropped nearly 8.5%, failing to hold above the psychological $100,000 level.

Minutes from the Federal Reserve’s December 18 meeting revealed concerns about the inflationary impact of incoming President Donald Trump’s policies, fueling speculation of slower rate cuts in 2025.

Despite the bearish sentiment, analysts are keeping a close eye on Friday’s nonfarm payrolls report.

Valentin Fournier, an analyst at BRN, remains optimistic, noting, “The U.S. employment report on Friday is highly anticipated as it will provide critical insights into the health of the U.S. economy. We expect limited volatility heading into the weekend and recommend maintaining a heavy exposure to digital assets, with a preference for Bitcoin over Ethereum.”

For crypto investors, this week’s sell-off serves as a reminder of the market’s volatility and its sensitivity to macroeconomic factors. Here’s what to keep in mind:

1. Watch Economic Data: Friday’s U.S. jobs report will likely set the tone for the market.
2. Focus on Long-Term Trends: Short-term sell-offs can present buying opportunities for those with a long-term perspective.
3. Diversify: Consider spreading your crypto investments across multiple assets to mitigate risk.