Wall Street Sells Off Risky Crypto ETFs Amid Market Crash
Wall Street is rapidly selling risky crypto exchange-traded funds (ETFs). The recent crash in digital assets wiped out billions in market value. The sell-off started as altcoin liquidity collapsed. Fund managers are reducing exposure to the most speculative crypto sectors.
Data from Farside Investors shows U.S. spot Bitcoin ETFs had over $530 million in outflows within 24 hours. ARK Invest’s ARKB led with $275 million in redemptions. Fidelity’s FBTC followed with $132 million. Bitcoin’s price fell below $105,000. Some altcoins lost up to 70% in one week.
The sell-off exposed the weakness of crypto ETFs linked to illiquid assets. As altcoin liquidity dried up, Bitcoin showed more resilience. ElonTrades on X noted, “When gold peaked in August 2020, $BTC ran from $10K to $60K within months. Now we’re seeing a similar setup.”
Bitcoin Shows Strength Amid Altcoin Decline
Bitcoin’s relative strength contrasts with the sharp losses in altcoins. The digital gold’s price drop is less severe than many altcoins. Market watchers see parallels with Bitcoin’s rise after gold’s 2020 peak. ElonTrades highlighted that Bitcoin is oversold while gold is overbought. Macro conditions may be easing, potentially supporting Bitcoin’s recovery.
ETF Innovation Continues Despite Market Challenges
Despite the sell-off, ETF development in crypto continues. Swiss asset manager 21Shares filed with the U.S. Securities and Exchange Commission (SEC) to launch a 2x leveraged ETF tied to Hyperliquid’s HYPE token. This token governs a decentralized exchange popular with DeFi traders.
If approved, this would be the first U.S. leveraged DeFi ETF. It would increase on-chain risk amid regulatory and investor concerns about crypto stability. The move highlights a split in the ETF market. Traditional firms reduce risk while crypto issuers pursue leveraged products.
