Bitcoin ETF Exodus: $100M Flees as Markets Reel from Trump’s Tariff Bombshell

On Thursday, U.S. spot Bitcoin ETFs suffered nearly $100 million in net outflows, as panic swept across financial markets. The culprit? Donald Trump’s surprise tariff announcement, sent shockwaves through Wall Street and rattled investor confidence.

The fallout was immediate. Stocks plunged, with the Nasdaq crashing 6%, the S&P 500 tumbling 4.8%, and the Dow slipping 3.9%. Crypto markets didn’t escape unscathed—Bitcoin tumbled more than 6%, slipping from its Thursday high of $88,500 to a far more fragile position.

Bitcoin ETFs Face a Bloodbath

The panic was clear in ETF flows. Grayscale’s GBTC led the exit, with a staggering $60.2 million in outflows. Bitwise’s BITB lost $44.19 million, and even Fidelity’s well-regarded FBTC saw $23.27 million walk out the door. Other ETFs—Ark’s ARKB, VanEck’s HODL, and WisdomTree’s BTCW—also faced significant outflows, signalling a broader shift in market sentiment.

But in a surprising twist, BlackRock’s IBIT, the largest Bitcoin ETF, stood strong. Instead of outflows, it saw $65.25 million in fresh investments, proving that some investors still see Bitcoin as a safe haven despite the chaos.

The Big Turnaround

Thursday’s exodus marked a dramatic reversal from just a day earlier when Bitcoin ETFs welcomed $220.76 million in inflows. This sudden swing underscores how fragile market sentiment has become.

Trump’s tariff move—slapping a 10% tax on imports and raising some to over 50%—sent shockwaves through global markets. Investors scrambled for safety, fearing further escalation and economic fallout.

Bitcoin’s Battle with Investor Caution

Bitcoin’s drop from $88,500 highlights a growing sense of caution in the crypto market. Institutional investors, who once viewed Bitcoin as a hedge against economic instability, appear to be reconsidering their risk exposure.

Market analysts warn that large ETF withdrawals suggest a cooling risk appetite, meaning that investors aren’t as willing to take chances in a volatile market. Instead, they’re waiting for a major macroeconomic event to reset the market’s direction.

At the same time, implied volatility (IV) is rising, indicating expectations of wider price swings ahead. With critical economic developments on the horizon, traders are gearing up for a period of high volatility, potentially unlocking new opportunities for those who thrive in uncertain conditions.

What’s Next?

Despite the short-term turmoil, crypto regulation is shaping up to be a wildcard. Alankar Saxena, Co-founder and CTO of Mudrex pointed out that legislation like the STABLE Act, which promotes stablecoin transparency, and the Senate Banking Committee’s recent moves toward a more crypto-friendly stance, could help Bitcoin regain momentum in the long run.

But for now, the market is at a crossroads. Bitcoin ETFs are showing cracks, investors are playing defence, and global uncertainty is mounting. Will Bitcoin hold its ground, or is this the start of an even bigger pullback?

One thing is certain—the pressure is on.