Bitcoin and Ethereum ETFs Bleed $439M as Options Traders Brace for More Downside

Bitcoin and Ethereum exchange-traded funds suffered a $439 million blow in total on Monday, wiping out much of last week’s inflows as investors repositioned around the Federal Reserve’s rate cut and braced for upcoming inflation data.

Bitcoin ETFs led the exodus with $363.1 million in outflows, led by Fidelity's FBTC shedding $276.7 million and ARK 21Shares' ARKB losing $52.3 million, according to Farside Investors data.

Meanwhile, Ethereum funds recorded $76 million in redemptions, led by Fidelity’s FETH hemorrhaging $33.1 million, followed by Bitwise’s ETHW at $22.3 million and BlackRock's ETHA at $15.1 million.

Onchain analyst Ali Martinez told Decrypt that Monday’s ETF redemptions were “largely driven by short-term positioning as traders adjusted to the Fed’s latest cut and upcoming inflation data.”

“If Friday’s PCE report comes in cooler than expected, we could quickly see flows turn positive again,” he added.

“A phase of profit-taking”

Last week, Bitcoin and Ethereum ETFs attracted $977 million and $772 million respectively, according to CoinShares’ weekly report.

Dean Chen, an analyst at Bitunix, told Decrypt that "the outflows signal a phase of profit-taking and de-leveraging" rather than a structural bear market.

"If ETF flows turn positive within the next 1–3 days, BTC could quickly rebound above $113,000 and ETH toward $4,200," Chen noted. "If outflows persist, BTC may retest $108,000 and ETH could slip to $3,900."

More than $354 million in crypto positions were liquidated in the past day, including $44 million tied to Bitcoin and $53 million in Ethereum, according to CoinGlass data.

Investors should closely monitor “ETF flows and derivatives leverage — the key signals for any sustained reversal,” Chen added.

Ruchir Gupta, co-founder of Gyld Finance, echoed the de-leveraging sentiment, telling Decrypt that what the market is seeing is “an exit of leverage that had been built up over the last few weeks.”

Despite the turbulence, he argued that the macro environment for digital assets is still bullish, pointing to the “Fed rate cut, S&P500 and NASDAQ at all-time highs, and the rise of digital asset treasuries.”

A period of “healthy consolidation” could see the market reset from “excess leverage and positioning in the market,” Gupta further cautioned.

Despite near-term bearishness, with put-call delta skew hitting its highest since early August, options traders remain "optimistic about the fourth quarter," Adam Chu, chief researcher at GreeksLive, previously told Decrypt.