Bitcoin and Ethereum ETFs Lose $965M After Record July

Key Points

• Bitcoin and Ethereum ETFs Lose $965M After Record July
• Bitcoin ETFs saw $812M in outflows, the worst in 5 months
• Ethereum ETFs lost $153M, ending 20-day inflow streak
• Sudden pullback follows July’s $12.8B inflow surge

After a historic July that drew over $12.8 billion into US-listed crypto exchange-traded funds, August kicked off with a surprising downturn.

According to SoSoValue data, investors pulled nearly $1 billion from crypto ETFs on August 1 alone. The sharp drop caught many by surprise, given the recent bullish trend.

US Crypto ETFs Inflow in July. Source: Eric Balchunas – Techtoken

Most of the damage came from Bitcoin ETFs, which saw $812 million in outflows—the biggest single-day exit in five months, and the second-largest all year. The 12 Bitcoin funds listed in the US bore the brunt of this pullback.

Meanwhile, Ethereum ETFs lost $153 million, snapping a 20-day streak of consistent inflows. That streak had brought in more than $5 billion in new capital for ETH products, signaling strong confidence before the reversal.

This sharp turn of events contrasts heavily with July’s rally, which had the crypto community celebrating renewed interest and institutional involvement.

Notably, Bitcoin recently aligned with a key peak M2 trend that historically signals long-term bullish cycles, yet that wasn’t enough to stop this dip.

US Crypto ETFs took in $12.8b in July, the best month ever, a $600m/day pace, about double avg. As a group that’s more than any single ETF did, incl the Mighty VOO. Further, every ETF in category took in cash (ex the converted Trusts) w/ Bitcoin and Ether making equal… pic.twitter.com/9bKvu6QysD

— Eric Balchunas (@EricBalchunas) August 1, 2025

Regulatory Progress Fails to Prevent Market Jitters

July wasn’t just about big inflows; it also brought positive regulatory momentum that many believed would support long-term ETF growth.

SEC Chair Paul Atkins announced Project Crypto, a new initiative aimed at updating US securities laws to better align with blockchain-based systems. The message was pro-innovation: Atkins made it clear the US must lead in crypto markets, not follow.

“To achieve President Trump’s vision of making America the crypto capital of the world, the SEC must holistically consider the potential benefits and risks of moving our markets from an off-chain environment to an on-chain one,” said Atkins.

As part of this project:

• The SEC approved in-kind redemptions for crypto ETFs

• Fast-tracked reviews for exchange-sponsored crypto funds

The developments gave ETF issuers and crypto investors new reasons to stay bullish. That’s why the August 1 outflows were so unexpected.

Nate Geraci, President of NovaDius Wealth, called the pullback “a muted end to one of the most pivotal weeks for digital assets,” and noted the mismatch between market behavior and regulatory signals. It echoes the recent sentiment around stablecoins like USDM, where utility and policy still appear out of sync.

Spot eth ETF record inflow streak is *over*…

Ends after 20 days.

Big outflows from spot btc ETFs as well.

Odd way to end what was perhaps most important week *ever* for crypto.

At least from a regulatory perspective.

“Sell the news.”

— Nate Geraci (@NateGeraci) August 2, 2025

What’s Behind the Sudden Pullback in Bitcoin and Ethereum ETFs?

So, why did Bitcoin and Ethereum ETFs suddenly bleed nearly a billion dollars?

Analysts point to a combination of profit-taking, market uncertainty, and global macroeconomic concerns. After weeks of steady inflows and price appreciation, some investors may have chosen to lock in gains, especially given crypto’s known volatility.

Others suspect institutional hesitation as traders await clarity on how SEC policy changes will play out in practice. Despite positive headlines, the rollout of Project Crypto is still in early stages, and the real impact may take months.

There’s also talk of external market pressures. A weaker US jobs report has raised expectations of interest rate cuts, which could eventually benefit crypto, but short-term uncertainty tends to trigger defensive reactions across all markets.

On the investor side, some losses like those seen by AguilaTrades may have triggered caution among risk-sensitive participants, further intensifying ETF redemptions.

And in the altcoin sector, debates like the ongoing XRP utility controversy have stirred wider skepticism about token use cases—possibly adding to a broader market pullback.

Still, ETF experts believe this isn’t the end of the road. The underlying momentum, regulatory support, institutional entry, and innovation in ETF structures remain strong. A few red days might just be part of the growing pains in a fast-maturing market.

For now, the industry is watching closely to see if this was a one-day shakeout or the start of a deeper trend.