Bitcoin and Ether ETFs Shed $1.11 Billion Over Two Days as Fed Hikes Rates to 4%, Crypto Prices Rise Anyway

Since Ethereum ETFs kicked off a nine-day, $1.42 billion inflow streak on August 17, with BlackRock's ETHA buying every single session, the streak ended sharply. US spot Bitcoin and Ether ETFs combined to lose roughly $1.11 billion over just two trading sessions this week, according to finalized Farside Investors data reported by Finance Feeds.

The damage came in two waves. On Tuesday, September 15, Bitcoin and Ether ETFs shed $592 million combined, their worst single day of outflows in months, per Coingabbar. The next day, Wednesday September 16, Bitcoin ETFs lost another $295.9 million and Ether ETFs lost $224.1 million, according to Finance Feeds.

That puts two-day Bitcoin ETF redemptions at $746.3 million and two-day Ether ETF redemptions at $366.4 million.

What triggered it

Two events collided in the same week. First, the CLARITY Act, legislation meant to settle which federal regulator oversees digital assets, failed in the Senate, according to Coingabbar. The act alone sparked more than $300 million in liquidated leveraged positions, with CoinGlass data cited by Coingabbar showing 84,956 traders liquidated and $341.08 million in total liquidations across crypto markets in the following 24 hours.

Second, the Federal Reserve raised its benchmark rate by a quarter point Wednesday to a range of 3.75% to 4.00%, its first hike since 2023, citing persistent inflation despite continued growth, Coingabbar reported. Fed Chair Kevin Warsh addressed reporters after the decision.

CME FedWatch data put the probability at 92.5% in the hours before the announcement, per Coingabbar, meaning most of the positioning happened before the Fed even spoke.

BlackRock led the exodus, again

BlackRock's iShares Ether Trust, ETHA, posted the single largest fund redemption in the sector on September 16 at $110 million, according to CryptoBriefing, Cryptonomist, and Bloomingbit, all citing the same underlying Farside Investors dataset. Fidelity's FETH lost $55.6 million and BlackRock's staking-enabled ETHB lost $19.8 million.

VanEck's ETHV shed $14 million, Grayscale's ETHE lost $13.9 million, and 21Shares' TETH recorded $10.8 million in redemptions, per Bloomingbit's breakdown of the Farside numbers. No Ether ETF posted a positive flow that day.

On the Bitcoin side, BlackRock's IBIT accounted for $144.1 million of the day's $295.9 million total outflow, nearly half the category, according to Finance Feeds. ARK Invest and 21Shares' ARKB lost $84.4 million, Fidelity's FBTC lost $52.7 million, and Grayscale's GBTC shed $18.2 million. Morgan Stanley's MSBT was the lone fund to see inflows, pulling in $3.5 million.

Cumulative net inflows now stand at roughly $54.64 billion for Bitcoin ETFs and roughly $13.14 billion for Ether ETFs since launch, per Finance Feeds. For scale, the two-day exodus still amounts to a small fraction of that accumulated base.

Prices didn't get the memo

Despite the selling, Bitcoin fell to around $75,350 ahead of the Fed decision, then climbed past $76,100 within minutes of the announcement and settled near $76,138, according to Coingabbar. Ethereum's spot price rose 1.54% the same day ETF investors pulled $224 million out. XRP traded near $1.30, up about 1.4%.

KuCoin's writeup flagged the disconnect directly. Fund flows and spot price can move independently. A day where ETF investors sell $224 million while the asset's price still rises suggests other buyers, possibly spot traders or short-covering, absorbed the selling pressure.

The fair concern for skeptics

Some market watchers read sustained ETF outflows as an early warning that institutional allocators are growing cautious, regardless of what spot prices do in the short term, KuCoin's coverage noted. That's a reasonable read: the CLARITY Act's failure means there's still no settled answer on which regulator has jurisdiction over digital assets, and uncertainty like that is exactly the kind of thing that makes large asset managers trim exposure heading into a tightening cycle.

The counterpoint is that the outflows so far are tiny relative to the roughly $54.64 billion in cumulative Bitcoin ETF inflows and roughly $13.14 billion in cumulative Ether ETF inflows built up since launch. Two rough days after a well-telegraphed rate hike and a legislative setback isn't the same as a structural reversal, and the price action on both assets suggests demand outside the ETF wrapper hasn't gone anywhere.

What's next

The Fed's own updated projections show 16 of 18 policymakers now anticipate at least one more 25-basis-point increase before the cycle is done, according to Coingabbar. If that additional hike materializes, ETF investors who just trimmed exposure on the first one will have to decide whether to keep de-risking, or whether Wednesday's price resilience was the more important signal all along.