Bitcoin ETFs Face Largest Monthly Outflow Amid Escalating Middle East Tensions

• U.S. Bitcoin ETFs saw $242.6M outflows on Oct. 1, the largest in a month, driven by Middle East tensions.
• Fidelity’s Wise Origin Bitcoin Fund led with a $144.7M outflow, while BlackRock’s iShares Bitcoin Trust posted a $40.8M inflow.
• U.S. Ether ETFs faced $48.6M outflows, led by Grayscale’s Ethereum Trust losing $26.6M, amid geopolitical uncertainty.

Bitcoin exchange-traded funds (ETFs) in the United States recorded a significant outflow of $242.6 million on Oct. 1, as rising tensions in the Middle East caused concerns among institutional investors. 

Notably, data from Farside Investors showed this was the largest outflow in almost a month, following a $288 million exit on Sept. 3. The geopolitical uncertainty appears to have triggered a wave of selling pressure, reversing an eight-day streak of inflows totaling $494 million as of Sept. 27.

Key Players See Largest Withdrawals

Intriguingly, Fidelity’s Wise Origin Bitcoin Fund witnessed the most substantial outflow, losing $144.7 million on the day. This marked the largest single withdrawal among the 11 U.S. spot Bitcoin ETFs. 

Additionally, ARK 21Shares Bitcoin ETF also saw a significant reduction, with $84.3 million flowing out. The Bitwise Bitcoin ETF followed with a $32.7 million outflow, while VanEck’s Bitcoin ETF recorded a $15.8 million withdrawal. Grayscale’s Bitcoin Trust shed $5.9 million. 

Meanwhile, several funds experienced zero flows, including those managed by Invesco, Franklin, Valkyrie, WisdomTree, and Grayscale’s Mini Bitcoin Trust. Despite the broader market selloff, BlackRock’s iShares Bitcoin Trust remained resilient, posting a positive flow of $40.8 million. This marked its 15th consecutive day without any outflows.

Besides, the sell-off in Bitcoin ETFs coincided with a sharp drop in the price of Bitcoin. Following reports of Iran’s missile attack on Israel, the cryptocurrency’s value plunged by nearly $4,000. 

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Notably, it reached a two-week low of $60,315 before slightly rebounding to $61,620. This sharp decline underscores how geopolitical events can impact the digital asset market, causing swift reactions among investors.

Ethereum ETFs Also See Outflows

In addition to Bitcoin, U.S. spot Ether ETFs faced similar challenges. The nine U.S. Ether products saw an aggregate outflow of $48.6 million on Oct. 1.

On the other hand, Grayscale’s Ethereum Trust led the withdrawals, losing $26.6 million, while Fidelity’s Ethereum Trust followed closely, shedding $25 million. These two funds contributed the bulk of the total outflows in the Ether market.