Bitcoin ETFs See Major Outflows Amid Tariff Tensions

On Tuesday, U.S. spot Bitcoin exchange-traded funds (ETFs) experienced a significant blow, with investors pulling out $326 million, marking the largest single-day outflow since March 11. This retreat follows growing concerns over escalating trade tensions between the U.S. and its global partners, triggered by President Trump’s new tariffs. The implementation of tariffs, including a 104% duty on Chinese imports, has created widespread uncertainty in global markets, prompting traders to de-risk their portfolios.

The pullback hit BlackRock’s Bitcoin ETF, IBIT, the hardest, with the fund losing $253 million on what was its third-worst day since its launch. This latest outflow extends a negative streak for Bitcoin ETFs, which have now seen withdrawals for four consecutive days. Concurrently, Bitcoin’s price fell to $75,100 on Tuesday, marking its lowest value in five months. Experts suggest that the combination of investor risk aversion and market reactions to Trump’s tariffs are behind the ongoing withdrawals.

The challenges faced by Bitcoin ETFs were mirrored in the performance of Ethereum. Ethereum’s spot ETFs also saw withdrawals, totaling $3.3 million on Tuesday. Fidelity’s Ethereum fund accounted for the largest share of these losses, contributing to the ongoing struggles of the cryptocurrency. Ethereum’s price dropped below $1,450, continuing its downtrend and reflecting a five-year low in its performance relative to Bitcoin, as the ETH/BTC ratio hit its lowest point in half a decade.

Despite these setbacks, Ethereum’s layer-2 networks, such as Arbitrum and Optimism, have seen growing activity and an increase in value locked on-chain. These networks are playing a crucial role in scaling Ethereum and mitigating some of the challenges on the mainnet. Additionally, Ethereum’s transaction fees have decreased to their lowest levels since August 2024, indicating reduced congestion on the network.

In contrast, Dogecoin gained institutional attention as 21Shares launched a fully backed Dogecoin exchange-traded product (ETP) on the SIX Swiss Exchange. This partnership with the Dogecoin Foundation marks a milestone for the meme-inspired cryptocurrency as it receives more institutional backing.

The market remains highly volatile as the effects of the tariff dispute continue to unfold. Investors are closely monitoring the performance of Bitcoin and Ethereum amidst these uncertain times, with both cryptocurrencies facing distinct but significant challenges in the wake of global economic shifts.