Bitcoin ETF rebounds, Ethereum and XRP ETF winning streak ends

U.S. spot Ethereum and XRP ETF ended their consecutive gains on Wednesday, and Bitcoin funds bucked the trend to attract gold.

On Wednesday, U.S. spot Ethereum and XRP ETF terminated their previous continuous net inflows. Bitcoin funds, on the other hand, went out of the opposite trend. According to SoSoValue data, their single-day net inflow was US$101.15 million.

An ETF (Exchange Traded Fund) is a fund that trades like a stock. Investors can gain exposure to cryptocurrency prices through regular brokerage accounts without having to hold the currency directly. Cryptocurrency ETFs are extremely popular among investors, and market observers pay close attention to the flow of funds in and out of these funds and regard them as a key indicator of current market sentiment.

The Ethereum ETF has previously achieved net inflows for 12 consecutive trading days, which means that for as long as two and a half weeks, inflows exceeded outflows every day. This round of net inflows totaled US$1.62 billion before ending Wednesday with a net outflow of US$48.08 million.

BlackRock's iShares Ethereum Trust (ETHA) led the outflow, with a net outflow of US$53.4 million; Fidelity's FETH had a net outflow of US$26.2 million; and Gray's Ethereum Pledged ETF (ETHE) had a net outflow of US$23.5 million. BlackRock's Pledged Ethereum ETF (ETHB)-which locks in Ethereum for online rewards and distributes some of the proceeds to shareholders-offset some of the outflow pressure with a net inflow of $52.9 million.

XRP showed a similar trend on a smaller scale. Previously, its net inflows totaled approximately $170 million for 11 consecutive trading days, pushing the total net inflow to $1.68 billion, and suffered a net outflow of $7.2 million on Wednesday. Almost all of the outflow came from Bitwise's XRP funds, while Franklin, Canary, 21Shares and the other four XRP products issued by Gray had no capital flow.

Bitcoin is moving in the opposite direction. Wednesday's net inflow of $101.15 million reversed Tuesday's net outflow of $236.5 million-the largest one-day outflow in the category since July 31, when BlackRock's IBIT alone contributed 85% of the outflow. This time, IBIT led the rebound, with a single-day net inflow of US$115.45 million, which exceeded the total net inflow of the day, while Gray's original GBTC fund still had a net outflow of US$56.21 million.

This violent fluctuation brought an end to a period of turbulence. Bitcoin ETF had a net inflow of US$3.52 billion in August, the best monthly performance since 2026, with a single-day net inflow in mid-August reaching US$606 million, the largest single-day inflow since May. Currently, the total net assets of this category are US$97.22 billion, and the cumulative net inflow since its launch in January 2024 is close to US$54.7 billion.

September has a habit of testing this momentum. In 8 of the past 13 years, Bitcoin closed down in September, a pattern that the market calls the "Red September". September this year coincides with the implementation of the Federal Reserve's interest rate decision from September 15 to 16. This is the first debate on whether to raise interest rates since the central bank's 2022-2023 tightening cycle.

Wednesday's divergence wasn't just about Ethereum and XRP losing momentum. The Solana ETF also reported a net outflow of US$6.13 million on the same day, meaning that three of the four major cryptocurrency ETF categories experienced capital withdrawals, with only Bitcoin rising. This is narrower than the signal of "cooling down the crypto market"-more like a concentrated influx of money into Bitcoin rather than a wide spread among various digital assets. This pattern also appeared in the institutional buying boom last month.

The simplest and straightforward explanation is that Bitcoin is safer as a larger asset in the ecosystem.

Another factor to consider comes from simple market expectations. Ethereum and XRP have just experienced their longest consecutive net inflows in months-reaching 12 and 11 trading days respectively, so both have reached a pause point where profits are locked in. In contrast, Bitcoin just experienced a net outflow on Tuesday and there is room for rebound.

The rest of the factors come from macro-level tensions. Fed Chairman Kevin Walsh's hawkish remarks at the Jackson Hole meeting pushed CME's FedWatch tool to show that the probability of a September rate hike exceeds 60%. When cryptocurrency investors become cautious, Bitcoin is often the first asset they buy back and last to withdraw because it has the deepest liquidity and longest institutional trading record in the market. While XRP and Ethereum are relatively new and thinly liquid, this caution is often first manifested in capital outflows.

The simplest explanation is often the right explanation.