Bitcoin & Ether ETFs Experience Sharp Decline Following Market Turbulence

• Over $755M withdrawn from US Bitcoin and Ethereum ETFs after global $20B crypto liquidations.

• Trade tensions over rare earth minerals and new tariffs triggered market uncertainty and a sell-off.

Monday saw major capital withdrawals in United States cryptocurrency exchange-traded funds amounting to more than $755 million in Bitcoin and Ethereum products. The huge exodus came after a weekend that had seen unprecedented liquidations of more than 20 billion across digital asset markets across the globe.

The mood of investors changed radically as trade tensions between Washington and Beijing intensified due to the restrictions on rare earth minerals.

Major Funds Witnessed Record Losses

Bitcoin ETFs lost a total of $326.52 million as investors pulled out due to exposure to risks in the face of increasing economic uncertainties. The flagship Bitcoin Trust by Grayscale had the largest redemption of $145.39 million, leaving the fund during the trading session on Monday alone. The Wise Origin Bitcoin Fund of Fidelity registered a withdrawal of $93.28 million as compared to $115.64 million withdrawals in the Bitwise Bitcoin ETF.

The iShares Bitcoin Trust by BlackRock defied the trend and gained new capital of $60.36 million as the market was weaker. The total Bitcoin ETF assets are at the moment at $157.18 billion, which is about 6.81% of the total market capitalization of Bitcoin.

Ether products were hit worse with $428.52 million out of funds, leaving as digital asset investors became risk-averse. The iShares Ethereum Trust at BlackRock registered the greatest one-day redemption of $310.13 million, which was a drastic turnaround for the product. The Ethereum Trust by Grayscale and the Ethereum Fund by Fidelity had a loss of $20.99 million and $19.12 million, respectively, throughout the session.

The turbulence in the cryptocurrency market was caused by the announcement of President Trump, who introduced 100% tariffs on the imports of Chinese products starting November first. The embargo of rare earth minerals that China exports as crucial commodities led to the retaliation trade policies that Washington had initiated.

Kronos Research Vincent Liu said that investors were assuming defensive stances until macroeconomic conditions clarify and offer better directional cues. The market participants are waiting to be resolved on a number of fronts, such as the possible outcomes of a government shutdown and developments in the international trade talks.

Although the institutional holdings have been volatile in the recent past, they are on the rise and the current institutional holdings of Bitcoin are dominated by public companies and ETFs, which control 12.2% of the circulating supply of Bitcoin. The accumulation trend implies that the confidence of the key institutional investors has not been lost in the short-term market shocks.

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