Signals of panic are multiplying in the crypto market. On Tuesday, American Bitcoin and Ethereum spot ETFs recorded a net withdrawal of $797 million, setting a record since the beginning of the quarter. The backdrop: a strengthening dollar, a tougher-than-expected Fed, and a prolonged government shutdown in Washington. The result: institutional investors temporarily pack up their bags.
A wave of institutional sales
The numbers speak for themselves. Bitcoin ETFs experienced $577.7 million in net withdrawals, their worst day since August 1st. Fidelity (FBTC) saw $356.6 million evaporate, Ark & 21Shares (ARKB) over $128 million, and Grayscale (GBTC) $48.9 million. Seven BTC funds out of seven displayed negative flows, marking a series of five consecutive days of outflows, totaling $1.9 billion less in the ecosystem.
A similar scenario unfolded for Ethereum: $219.3 million exited the spot ETFs, with $111 million from BlackRock’s flagship product (ETHA). Fidelity and Grayscale were also affected. The only glimmer of stability: the new Solana ETFs, still marginal, recorded $14.8 million in inflows, their weakest performance since launch, but still in the green.
The return of “extreme fear”
“This is not a pause, it’s a recalibration,” explains Rachael Lucas, analyst at BTC Markets. Institutions are reducing exposure to manage risk in a tighter macro environment.
The firm message from Jerome Powell crushed any hope of rate cuts before 2026, pushing the dollar index (DXY) above 100 points. The scenario is clear: a strong dollar, a waning Nasdaq, and risky assets, including crypto, in a correction mode.
The Fear & Greed index (crypto greed and fear) plummeted to 21 points, from 42 the previous day: the market officially entered into extreme fear territory, for whatever it’s worth. “Fear feeds off ETF flows,” confirms Derek Lim, research head at Caladan.
Powell’s comments strengthened the dollar and sparked a flight to safety, exacerbated by the political uncertainty of the shutdown.
An always bullish fundamental
However, all is not bleak. According to Lim, the bullish structure of the crypto market remains intact. “A delayed rate cut is a short-term hindrance, but the direction remains the same: the end of monetary tightening is approaching.”
The 21.5% drop in Bitcoin (from $125,000 to $99,000) remains moderate compared to the -31% in the first quarter, during the chaos caused by the “Liberation Day” taxes.
If the outflows continue, the selling pressure will persist. But as soon as the macro narrative shifts, with rate cuts, a weaker dollar, or renewed interest in asset tokenization, the market will quickly recharge.
Rachael Lucas, BTC Markets analyst
The market between panic and patience
Currently, Bitcoin is trading around $101,500, down 2.3% in 24 hours, while Ethereum drops 4.7% to $3,326. Investors remain nervous, but not resigned. In a market dominated by fear, every decline already attracts the first buyers waiting for the next bullish cycle.
