US spot crypto ETFs lose over half a billion dollars as post-midterm gains reverse

Investors withdrew more than half a billion dollars net from U.S. spot crypto ETFs on Thursday as markets surrendered gains made after the U.S. midterm election results. Major U.S. crypto ETFs have recorded combined net outflows exceeding $1.1 billion so far this week.

The Block's compiled data show Fidelity's FBTC led bitcoin ETF withdrawals on Thursday with $199.9 million. The Block's data put net outflows from BlackRock's IBIT at $105 million. The Block's data show Grayscale's GBTC recorded $49.9 million in net withdrawals. The Block's data also show withdrawals from Franklin Templeton's EZBC, VanEck's HODL and Ark Invest's ARKB, while the remaining bitcoin ETFs recorded no net flows.

BlackRock's ETHA led withdrawals among Ethereum funds with $75.2 billion in redemptions. BlackRock's ETHB recorded $22 billion in redemptions. Fidelity's FETH and Grayscale's ETHE also experienced withdrawals.

SoSoValue data show U.S. Solana ETFs recorded combined net outflows of $1.2 million for the day. SoSoValue data put Zcash ETF net withdrawals at $11 million. SoSoValue data show Hyperliquid ETFs recorded $3 million in net outflows. However, SoSoValue data show XRP ETFs registered no net flows.

Bitcoin fell 5.6% on Thursday, reversing more than Wednesday's initial 4% increase after Tuesday's U.S. midterm elections. Ether declined 7.8% on Thursday. The GMCI 30 index, which tracks a selection of the 30 leading cryptocurrencies, lost 6.4%.

The Nasdaq Composite declined 5.5%. The S&P 500 fell 4.4% as investors assessed possible restrictions on AI infrastructure expansion after Democrats won both the House and Senate. Capital.com senior financial market analyst Kyle Rodda said the Democratic sweep intensified concerns about the AI investment boom. Rodda said investors were already questioning technology valuations and the speed of infrastructure spending. Rodda said political and regulatory risks emerged when AI-related investments were already vulnerable, citing disappointing earnings and indications that AI spending was slowing.

IG chief technical analyst Axel Rudolph said bitcoin had fallen alongside AI-related investments as investors rapidly reduced risk across technology and crypto markets. Rudolph said bitcoin's correlation with technology shares made bitcoin vulnerable to the selloff. Rudolph said leveraged crypto liquidations exceeded $1 billion over 24 hours as markets continued falling.

Friday's U.S. employment figures could create further market difficulties, particularly if the figures strengthen the Federal Reserve's reasons for increasing interest rates. Capital.com senior market analyst Daniela Hathorn said economists anticipate around 60,000 to 65,000 new jobs. Hathorn warned that stronger employment figures, especially higher wage growth, could raise Treasury yields and strengthen the dollar.

However, Bitwise head of research for Europe André Dragosch expects bitcoin to outperform U.S. equities despite broader market weakness as investors retreat from AI-related investments. Dragosch said bitcoin now responds more to the dollar and monetary policy expectations than to economic growth. Dragosch said bitcoin could move independently of stocks if financial conditions improve.