Bitcoin ETF attracts new funds, and crypto-asset capital flows rotate

Bitcoin ETF funds return: Short-term rotation of institutional funds rather than full withdrawal

On September 2, U.S. Bitcoin exchange-traded funds (ETFs) attracted US$101.15 million in capital inflows. The rebound followed a $236.5 million outflow the previous day. At the same time, Ethereum and XRP ETF ended the continuous positive growth momentum of attracting US$1.62 billion and US$170 million respectively, and Solana-related products also recorded negative returns. These market dynamics suggest that capital is temporarily rotating towards Bitcoin, rather than general divestments by institutional investors.

Core Data Summary

• Bitcoin ETF regained net capital inflows, with new funds reaching US$101.15 million.
• BlackRock led the rally, with its IBIT ETF capturing $115.45 million.
• The Ethereum ETF ended twelve trading days of positive growth, recording a net outflow of US$48.08 million.
• The XRP ETF ended eleven days of capital inflows and recorded a withdrawal of US$7.2 million.
• On September 3, the capital flows of Bitcoin, Ethereum and Solana ETF all turned positive.

BlackRock leads a rebound in Bitcoin ETF

Bitcoin ETF is back on a positive flow track after setting its largest one-day outflow since July 31. However, the $101.15 million captured on September 2 only made up for 43% of the $236.5 million outflow the previous day.

BlackRock played a key role in this transition. Its IBIT ETF attracted $115.45 million in funding, which exceeds the combined net traffic for the entire category. Grayscale's GBTC recorded an outflow of US$56.21 million, which affected the overall results.

This transaction showed four very different capital movements:

• Bitcoin ETF attracted US$101.15 million;
• Ethereum ETF lost US$48.08 million;
• XRP ETF suffered US$7.2 million outflow;
• Solana ETF recorded US$6.13 million outflow.

This difference highlights investors 'preference for the most liquid crypto assets. However, this does not mean that there will be continued outflows of altcoins, as these negative amounts are still small compared to the cumulative inflows in previous weeks. Notably, the Bitcoin ETF attracted $3.52 billion in funds in August, setting its best monthly performance this year. As a result, the total size of such assets is approximately US$97.22 billion, while cumulative inflows since January 2024 have reached US$54.7 billion.

Ethereum ends a record of continuous inflows of US$1.62 billion

As for Ethereum ETFs, they ended twelve consecutive trading days of inflows. During this period, a total of US$1.62 billion was added to various products, followed by an outflow of US$48.08 million on September 2.

BlackRock recorded opposite funding movements between its two funds: the ETHA ETF lost $53.4 million, while the ETHB product, which combines pledge capabilities, attracted $52.9 million. Fidelity recorded an outflow of $26.2 million, while Gray's ETHE lost $23.5 million.

This daily outflow only accounted for about 3% of the capital collected in the previous twelve trading days. Therefore, this constitutes a pause in the upward momentum, but has not yet constituted a fundamental reversal of the institution's focus on Ethereum.

XRP ETF lost US$7.2 million

XRP-related products ended a series of eleven trading days of positive growth. The cycle previously generated net inflows of nearly $170 million, bringing its cumulative total since its launch to $1.68 billion.

The $7.2 million divestment was almost entirely concentrated in Bitwise funds. For products such as Franklin Templeton, Canary Capital, 21Shares and Gray, there were no significant funding changes.

This outflow accounted for only 4.2% of cumulative inflows during the positive growth cycle. Similar to Ethereum, a negative value in a single day is not enough to establish a lasting loss of interest. A series of consecutive divestments are needed to confirm a change in trend.

The reversal between Bitcoin and Ethereum lasted only one trading day

The latest released statistics reinforce this cautious view. On September 3, the Bitcoin ETF recorded an additional inflow of $730.8 million. BlackRock contributed $454 million, while Fidelity and Ark Invest attracted $74.4 million and $137.7 million respectively, according to Farside Investors.

The Ethereum ETF also resumed capital inflows in subsequent transactions. They captured $141.4 million, including $72.1 million from BlackRock's ETHA and $65.1 million from Fidelity's FETH. Solana-related products also returned to a positive balance of $6.4 million.

However, the monetary environment remains full of uncertainty. After Christopher Waller's comments, the probability of a U.S. interest rate hike dropped from 63.2% to nearly 50.4%. He stated: "If progress is made towards our 2% target, I can support keeping interest rates unchanged."

Money flows over the next few trading days will help distinguish between two scenarios: continued inflows will confirm a return in institutional demand; while new outflows are more likely to indicate that investors are holding a wait-and-see attitude ahead of the Fed's September 16 decision.