Bitcoin ETFs Suffer Losses for Fourth Consecutive Day Amid U.S. Stagflation Concerns Impacting BTC and Stock Markets
Investors withdrew money from U.S.-listed spot bitcoin (BTC) exchange-traded funds (ETFs) for the fourth consecutive trading day as U.S. service sector data raised concerns about stagflation. The 11 ETFs recorded a cumulative net outflow of $196 million on Tuesday, with Fidelity’s FBTC and BlackRock’s IBIT contributing significantly to this total, according to data from SoSoValue. This four-day outflow streak, the longest since April, started last Thursday when the ETFs experienced an outflow of $114.83 million, followed by $812.25 million on Friday and $333.19 million on Monday.
The U.S. ISM Non-Manufacturing or services PMI released on Tuesday revealed inflation driven by tariffs, employment weaknesses, and trade disruptions, all indicating stagflation—an unfavorable scenario for risk assets, including technology stocks and cryptocurrencies. U.S. stocks declined, with the tech-heavy Nasdaq index dropping 0.7%, reversing Monday’s gains. Bitcoin, the leading cryptocurrency by market capitalization, fell over 1% to $112,650, trading near $114,000, as reported by CoinDesk.
“The stagflationary environment reflected in the ISM data is pressuring risk assets,” commented founders of the newsletter service LondonCryptoClub on X, following the release of the services PMI. “With narrow growth in new orders and activity, coupled with rising prices, stagflation presents the most detrimental scenario for risk if it prevents the Federal Reserve from cutting rates to support slowing growth,” they added.
Speculation about a Fed rate cut has increased since Friday’s disappointing nonfarm payroll data indicated labor market weaknesses. According to Bloomberg, options linked to the Secured Overnight Financing Rate, which closely monitors anticipated Fed monetary policy, suggest the potential for cuts in each of the remaining three meetings this year, possibly reducing rates by a total of 75 basis points in 2025. LondonCryptoClub mentioned that rising risks to growth and employment may be sufficient for the Fed to implement cuts in September.
Ether ETFs register inflows
While BTC ETFs faced outflows, ether (ETH) ETFs saw an inflow of $73.22 million, ending a two-day losing streak. The SEC’s guidance indicating that staking activities and the receipt of tokens—under specific conditions—do not qualify as securities offerings likely boosted investor interest in ether ETFs. Nate Geraci, president of NovaDius Wealth Management, noted that this guidance has cleared the final hurdle, paving the way for market regulators to approve spot ether ETFs with staking.
