Crypto ETFs See $337.2M Outflow Amid Trade Tensions

Crypto investors have been rapidly pulling out of spot Bitcoin and Ether ETFs due to escalating trade tensions and the resulting market uncertainty. The outflows from Bitcoin ETFs were particularly significant, with over $326 million withdrawn on April 8 alone. This trend is part of a broader market reaction to the tariffs, which have fueled recession fears and led investors to seek safer havens, causing a widespread recoil from speculative assets, including cryptocurrencies.

The uncertainty surrounding trade policies has also impacted the demand for Ether ETFs. Nine funds experienced a net outflow of $11.2 million on a single day, reflecting a similar trend of investors moving away from these assets. The dwindling demand can be attributed to the broader market sentiment, which has been heavily influenced by the tariff-driven uncertainty.

Despite the approval of spot Ether ETFs, market reception has been muted compared to the inflows seen in Bitcoin products. BlackRock’s ETHA, one of the largest Ether ETFs, currently holds $1.8 billion in net assets, a significant drop from its early-year peak. Analysts believe that the availability of options will enhance Ether’s appeal to risk-managed portfolios and provide new pathways for market makers to ensure deeper liquidity and tighter spreads across Ether markets.

The regulatory softening under the new administration has been surprisingly swift, with multiple high-profile investigations into crypto firms being shelved. This shift has been noted by legal scholars, who observed that the regulatory environment has become more permissive. Pro-stablecoin bills are advancing through Congress, and lawmakers have hinted at a sweeping crypto market structure bill that could be finalized before the end of 2025. These developments are paving the way for a more comprehensive crypto regulatory framework, which could catalyze a reversal in institutional sentiment towards Ethereum.

As Ethereum’s utility and legitimacy continue to expand, market observers are optimistic about the long-term prospects of the asset. The availability of options, combined with a more permissive regulatory environment, could drive a reversal in institutional sentiment. While Ether’s price currently lingers around $1,616, near a two-year low, the regulatory shifts and new financial instruments could catalyze a turnaround in investor interest.

The broader crypto ETF landscape is also expanding, with digital asset manager 21Shares filing for a spot Dogecoin ETF. This proposed ETF would offer traditional investors direct exposure to Dogecoin through a regulated financial product. The filing comes amid a growing wave of applications from rival firms, reflecting a broader trend of institutional interest in meme coins. The collaboration with the Dogecoin Foundation’s corporate arm, House of Doge, marks a rare formalization of community-led assets into structured, institutionally-accessible investment products.

The regulatory environment for meme coins remains uncertain, as the SEC has yet to give clear guidance on whether assets like Dogecoin meet the criteria for spot ETF approval. However, optimism remains high, with analysts estimating a 75% chance that the SEC will approve a spot Dogecoin ETF this year. This environment is ripe for what analysts refer to as a “spaghetti cannon approach,” where issuers are testing the limits of what the SEC might approve under the current leadership.

Beyond the US, 21Shares is already taking steps to expand its Dogecoin product suite. The firm announced the launch of a fully backed Dogecoin exchange-traded product (ETP) on Switzerland’s SIX Swiss Exchange, in partnership with House of Doge. This European version of the DOGE fund will trade under the ticker “DOGE” and will carry a 2.5% management fee. By offering the product first in Europe, 21Shares is testing international markets while building momentum ahead of a possible US launch.

The expanding crypto ETF landscape reflects a broader trend of institutional interest in cryptocurrencies. 21Shares, one of the most active players in the crypto ETF arena, has filed for a spot Polkadot (DOT) ETF and previously filed for a spot XRP ETF. Dogecoin, originally launched as a satirical response to the wild world of cryptocurrencies, has proven remarkably resilient and has evolved into a cultural and financial force. If approved, the 21Shares Dogecoin ETF would be a watershed moment for the entire category of meme coins, potentially rewriting the rules of what’s considered investable in the world of finance.