Bitcoin ETFs Lose Steam as Trump Tariff War Sparks $157M Exodus

TLDR

Table of Contents

Bitcoin ETFs saw $157 million in outflows last week, ending a six-week inflow streak of $9.6 billion
Tariff tensions between the US and China drove the reversal, with Trump doubling steel tariffs to 50%
QCP Capital expects Bitcoin to remain range-bound between $100k-$110k through June
SEC Commissioner Hester Peirce says the agency will consider allowing in-kind redemptions for Bitcoin ETFs
Major ETF providers like BlackRock and ARK have filed proposals to enable direct Bitcoin redemptions instead of cash

Bitcoin exchange-traded funds experienced their first weekly outflows in six weeks, with $157 million leaving the products as trade tensions between the United States and China escalated. The reversal marks the end of a strong run that brought over $9.6 billion in inflows since mid-April.

The outflows coincided with Bitcoin’s price falling below $110,000 after climbing from $84,000 during the six-week inflow period. Ark 21Shares and Fidelity funds led the exodus of capital from Bitcoin ETFs.

The shift in investor sentiment came after President Trump accused China of violating a preliminary trade arrangement made in May. The US responded by doubling tariffs on Chinese steel imports to 50% and expanding technology sanctions.

China dismissed the accusations on June 2 but warned it would take measures to protect its interests. The escalating rhetoric raised concerns about renewed trade wars affecting global markets.

CoinShares Head of Research James Butterfill noted that Bitcoin ETFs started the week with strong inflows. The trend reversed mid-week following a New York Court decision declaring US tariffs illegal, ultimately ending with minor outflows.

Range-Bound Trading Expected

Crypto trading firm QCP Capital warned that tariff tensions will drive market narratives through June. The firm expects major policy decisions only after July 8, suggesting markets may remain paused until then.

QCP Capital pointed to several technical indicators showing muted price action ahead. Volatility compression, normalizing risk reversals, and flat perpetual funding rates all signal reduced market activity.

The trading firm projects Bitcoin will remain range-bound between $100,000 and $110,000 during this period. This outlook reflects the cautious sentiment among institutional investors facing macro uncertainty.

Glassnode analysis showed that profit-taking could stall any potential rally. The firm highlighted the importance of new buyer demand versus existing holders locking in gains.

At the same time, First-Time Buyers remain active (30D RSI > 90). If new demand holds, the #Bitcoin rally could continue. If it fades, the lack of momentum support and rising profit-taking could lead to short-term consolidation – worth monitoring cohort rotation. pic.twitter.com/4A3NtddOx0
— glassnode (@glassnode) June 2, 2025

Current data shows demand from new buyers remains strong while profit-taking stays modest. However, any macro-driven market selloff could accelerate outflows from Bitcoin products.

SEC Considers In-Kind Redemptions

SEC Commissioner Hester Peirce announced the agency will consider allowing in-kind redemptions for Bitcoin ETFs. This development could change how these investment products operate.

Currently, Bitcoin ETFs use an “in-cash” model where investors receive dollars instead of actual Bitcoin when redeeming shares. ETF issuers must handle Bitcoin conversions themselves, creating operational complexity.

In-kind redemptions would allow investors to receive actual Bitcoin instead of cash. This system is considered more efficient as authorized participants could exchange ETF shares directly for the underlying cryptocurrency.

BlackRock initially agreed to exclude in-kind redemptions when Bitcoin ETFs were first approved in early 2024. The asset manager filed a proposal with Nasdaq in January 2025 to allow this feature.

The current cash redemption model creates tax complications when ETF issuers sell Bitcoin to meet withdrawal requests. These transactions can trigger taxable events that complicate the investment structure.

Major ETF providers including BlackRock and ARK have submitted proposals this year requesting permission for in-kind redemptions. The SEC’s consideration of these requests could streamline Bitcoin ETF operations and reduce costs for investors.

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