The cryptocurrency industry was celebrating big wins in the regulatory arena, but investors quickly pulled back. Bitcoin and Ethereum ETFs had one of their worst outflows of the year on Friday. Experts are confused about the timing, especially since the SEC made a lot of big policy changes last week.
What made the ETF outflows happen even though the changes were good?
During a historic week for the crypto industry, investors pulled $812 million out of Bitcoin ETFs and $153 million out of Ethereum funds on Friday. This was a shocking turn of events. These were the second-largest daily outflows for both assets this year, and the timing couldn’t have been stranger.
The market moved right after a lot of good news about rules. It looked like this week could really help the prices of cryptocurrencies go up. But in reality, a lot of investors probably saw the rally at the end of the month as a chance to make money, especially since Bitcoin hit a record high of over $116,000 in July before falling.
What are the SEC’s new rules for cryptocurrencies?
Last week, the U.S. Securities and Exchange Commission (SEC) made some big changes that showed it was changing its mind about crypto. It allowed spot Bitcoin and Ethereum ETFs to create and redeem in-kind. This is a big step that lets people trade shares of funds for cryptocurrency instead of cash. This change saves money and makes the prices of ETFs work better.
Cboe and Nasdaq both asked for crypto ETF listings to be the same on all exchanges. Experts say that NYSE Arca will follow soon.
The head of the SEC, Paul Atkins, announced Project Crypto, a big effort to change the rules for on-chain finance. It wants to make it easier to start regulated crypto products and decentralized finance tools by making it clear which tokens are securities.
What does this mean for the cost of Bitcoin and Ethereum?
There were some outflows on Friday, but both Bitcoin and Ethereum ended July in good shape. Bitcoin was worth $116,000 at the end of the month, which was a new all-time high for the month. Ethereum went back down to $3,700, which was its level in March.
Bitcoin dropped a little to $113,840 on Saturday, and Ethereum dropped to $3,510, which is a drop of 0.5% and 2.7%, respectively.
The long-term outlook for institutional crypto adoption is still good, though, because rules are becoming clearer and ETF systems are becoming more effective. This could just be a break for now, not the beginning of a bigger change.
Also read: Ethereum Surges as Companies Shift Focus from Bitcoin: Is It Time to Invest?
