The momentum behind spot Bitcoin exchange-traded funds (ETFs) in the United States has recently taken a sharp downturn, with net outflows nearly doubling amid growing skepticism over former President Donald Trump’s proposed U.S. Crypto Strategic Reserve. On March 4, Bitcoin ETFs recorded $143.43 million in net outflows—almost double the $74.19 million in inflows seen just one day prior—signaling a shift in investor sentiment.
Data from SoSoValue highlights a broad-based retreat across major ETF providers. Fidelity’s FBTC led the sell-off with outflows of $46.08 million, closely followed by ARK 21Shares’ ARKB at $43.92 million. Franklin Templeton’s EZBC saw $35.71 million in redemptions, while Bitwise’s BITB, Invesco Galaxy’s BTCO, and WisdomTree’s BTCW contributed further downward pressure with outflows of $23.96 million, $16.47 million, and $13.07 million respectively.
Despite the overall negative trend, Grayscale’s mini Bitcoin Trust stood out as a rare bright spot, attracting $35.77 million in net inflows and partially offsetting the broader market exodus. The remaining five BTC ETFs reported no significant movement on the day.
Total trading volume for Bitcoin ETFs reached $4.55 billion on March 4, reflecting active market participation despite the outflow trend. Since their launch, these ETFs have accumulated $36.72 billion in net inflows—a testament to their growing role in institutional and retail investment strategies.
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Ethereum ETFs Rebound with Renewed Investor Interest
While Bitcoin ETFs faced headwinds, Ethereum-based ETFs showed signs of recovery. On the same day, the nine active spot Ether ETFs reversed an eight-day losing streak, registering $14.58 million in net inflows.
Fidelity’s FETH emerged as the top performer, drawing in $21.67 million. Grayscale’s ETHE and its mini Bitcoin Trust followed with inflows of $10.71 million and $8.46 million respectively. However, BlackRock’s IBIT was an outlier, reporting $26.27 million in outflows—suggesting divergent strategies among major asset managers.
This rebound may indicate that investors are beginning to differentiate between Bitcoin and Ethereum based on use cases, regulatory outlooks, and ecosystem developments.
Market Reacts to Trump’s Crypto Strategic Reserve Proposal
The surge in Bitcoin ETF outflows coincided with market reactions to Donald Trump’s weekend announcement of a proposed U.S. Crypto Strategic Reserve—a plan designed to position America as the “Crypto Capital of the World.” The initiative would involve government acquisition of digital assets, primarily Bitcoin and Ethereum, to build a national crypto reserve.
While ambitious, the proposal has sparked controversy within the crypto community. Critics argue it undermines decentralization, one of Bitcoin’s foundational principles. The idea of a government stockpiling a currency designed to operate independently of central control raises concerns about potential manipulation and politicization of asset prices.
Anthony Pompliano, CEO of Morgan Creek Digital and a prominent Bitcoin advocate, voiced strong opposition. In a client letter, he called the plan “a mistake the U.S. will regret,” warning that it treats crypto as a “random mix of speculative assets” that could enrich insiders at taxpayer expense.
Pompliano emphasized that even though his firm holds significant positions in altcoins like Solana, he remains skeptical of broad government intervention in crypto markets. “Just because we believe in digital assets doesn’t mean we support state-driven speculation,” he wrote.
Price Volatility Reflects Investor Uncertainty
Market volatility quickly followed the announcement. After surging 11% to an intraday high of $94,770 on March 3, Bitcoin retraced sharply—losing 13.8% to trade at $81,700 on March 4—as investors adopted a risk-off stance amid trade tensions and policy uncertainty.
Ethereum mirrored this trend, dropping 19% from its recent peak to $2,055 before partially recovering. As of the latest data, **Bitcoin** has rebounded to $87,163 (up 3.6% over 24 hours), while Ethereum trades at $2,180, also up 3.6%.
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Bitcoin’s Performance Under Scrutiny in 2025
Uldis Teraudklans, Chief Revenue Officer at Paybis, offered a sobering assessment of Bitcoin’s performance in 2025. Year-to-date, Bitcoin has declined by as much as 11.47%, underperforming traditional safe-haven assets like gold, which rose 10.65% during the same period despite similar macroeconomic pressures.
Citing a Bank of America survey revealing that 58% of fund managers still view gold as a reliable store of value during geopolitical or trade conflicts—compared to just 3% who trust Bitcoin—Teraudklans noted that “Bitcoin has proven more reactive to macro trends like trade wars and interest rate shifts.”
He attributed this sensitivity to increased institutional exposure. With major Wall Street firms now deeply involved in crypto through ETFs and derivatives, liquidity flows have amplified price swings.
February was particularly harsh for Bitcoin, marking a 17.39% decline—the worst February since 2014 and the only negative one following a halving event. Teraudklans linked this downturn to waning institutional appetite, escalating U.S.-China trade tensions, and Bitcoin’s growing correlation with the S&P 500.
“Bitcoin has never been a safe-haven asset—only an aspirational one,” Teraudklans stated. “Each cycle reignites the debate about whether it can serve as a hedge against inflation or crisis. But historically, it behaves as a risk asset.”
He added: “Only when Bitcoin reaches the market capitalization of gold—currently around $15 trillion—can we seriously evaluate whether it can replace gold as a true safe-haven.”
FAQ: Understanding the Current Crypto Market Shifts
Q: Why are Bitcoin ETFs experiencing outflows?
A: Recent outflows are driven by investor caution following Trump’s crypto reserve proposal, macroeconomic uncertainty, and rising correlation between Bitcoin and traditional risk markets like equities.
Q: Are Ethereum ETFs performing better than Bitcoin ETFs?
A: On March 4, yes—Ethereum ETFs saw $14.58 million in net inflows after eight consecutive days of outflows, suggesting renewed confidence in ETH’s ecosystem and utility.
Q: What is the U.S. Crypto Strategic Reserve?
A: It’s a proposed initiative by Donald Trump to create a national reserve of cryptocurrencies like Bitcoin and Ethereum, aiming to establish U.S. leadership in digital assets—but critics fear it could compromise decentralization.
Q: Is Bitcoin still considered a safe-haven asset?
A: Not currently. Experts like Uldis Teraudklans argue that while Bitcoin aspires to be a safe haven, its price behavior aligns more closely with risk assets due to institutional trading patterns and market sentiment.
Q: How does institutional involvement affect crypto volatility?
A: Greater institutional participation increases liquidity but also ties crypto prices more closely to macro factors like interest rates and stock market movements, leading to sharper swings during periods of uncertainty.
Q: Could government ownership of crypto undermine trust in decentralization?
A: Many in the crypto community believe so. Holding large amounts of Bitcoin or Ethereum could allow governments to influence prices or enforce regulatory control—contrary to the original vision of permissionless finance.
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Final Thoughts
The recent turbulence in Bitcoin ETF flows underscores a pivotal moment for digital assets: as they gain mainstream financial integration, they also become more susceptible to political narratives and macroeconomic forces.
While long-term believers maintain faith in Bitcoin’s trajectory toward becoming a global reserve asset, short-term realities show it remains highly sensitive to sentiment, regulation, and institutional behavior.
For investors navigating this evolving landscape, understanding the interplay between policy proposals like the Crypto Strategic Reserve and market mechanics is crucial—not just for timing entries and exits, but for assessing whether digital assets are fulfilling their original promise as decentralized alternatives to traditional finance.
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