On Tuesday, the heaviest outflows of Bitcoin ETFs in the past four months occurred as cryptocurrency prices plummeted.

• On Tuesday, spot bitcoin exchange-traded funds experienced their worst day in over four months, coinciding with a broader market selloff.
• According to Farside Investors data, the biggest day for ETF outflows since May 1 saw more than $287 million withdrawn from 11 U.S.-listed ETFs.
• The excitement surrounding bitcoin ETFs has waned in recent months after their initial success.

On Tuesday, exchange-traded funds experienced their worst day in over four months, with investors withdrawing funds as part of a broader market selloff.

Since May 1, the biggest day for ETF outflows in the U.S. was when more than $287 million was withdrawn from 11 listed ETFs, according to Farside Investors data. These funds were launched in January after the SEC ruled that they could package bitcoin into ETFs, similar to how they do with stocks and bonds.

On Tuesday, investors sold more than $162 million worth of shares in Fidelity's FBTC fund, while Grayscale recorded outflows of $50.4 million, and Ark 21Shares and Bitwise's BITB offering also experienced outflows of $33.6 million and $25 million, respectively.

The initial excitement about bitcoin ETFs has decreased in recent months after a successful launch that set a new record for the ETF market. Currently, spot bitcoin funds have approximately $52.6 billion in assets under management, which is $10 billion less than their peak.

The decline in the price of bitcoin, which reached a record of over $73,000 in March and has since fallen to about $58,400, is a significant factor in the decline. Bitcoin dropped almost 3% on Tuesday, which was also a down day for equities after weak manufacturing data raised concerns about an economic slowdown. This was the fifth consecutive day of redemptions across the spot funds.

ETFs that track ether have also experienced a rough month, with outflows resulting from a 6% drop in the cryptocurrency on Tuesday. Analysts noted that redemptions were entirely driven by Grayscale, as investors unloaded more than $52 million worth of shares in its ETHE product.

Despite an inflow of $4.9 million into Fidelity's spot ether product, the total assets of the spot funds have decreased from $10.2 billion in July to around $6.7 billion, resulting in tepid flows overall.

Wall Street banks and hedge funds were buyers of bitcoin ETFs, but data regarding ether ETF purchases won't be available until the next round of filings.

Institutional ownership of spot bitcoin ETFs increased to 24% by the end of the quarter, as shown in quarterly disclosures with the SEC, according to a note from analysts at H.C. Wainwright.

In the period, Goldman Sachs entered the crypto ETF market by investing $418 million in bitcoin funds.

In the latest quarter, Morgan Stanley reduced its holdings in spot bitcoin ETFs from $270 million to $189 million, despite having started earlier with $1.5 trillion in assets under management.

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