On Wednesday, investors withdrew nearly $1 billion from exchange-traded funds (ETFs) focused on the spot prices of Bitcoin and Ethereum, highlighting a significant shift in the market amid geopolitical tensions stemming from U.S. President Donald Trump’s recent comments regarding Greenland. The combined outflow from spot Bitcoin and Ethereum ETFs reached approximately $996 million, marking a notable retreat from cryptocurrency investments.
As Trump communicated through his Truth Social platform, he indicated that he had “a framework of a deal” related to Greenland and the Arctic region, following discussions with NATO Secretary Mark Rutte. This marked a shift in his earlier aggressive stance, as he had recently threatened tariffs against European nations opposing his ambitions for the semi-autonomous island. Wednesday’s comments led to a rebound in markets, which had dipped on Tuesday due to tariff concerns.
Danish Prime Minister Mette Frederiksen responded to Trump’s revised approach, expressing a willingness to engage but firmly asserting that Denmark’s sovereignty could not be traded. This situation further reflects what some analysts have coined as a “TACO” situation—short for “Trump Always Chickens Out,” referring to the president’s tendency to retreat from previously announced aggressive economic tactics when market conditions worsen.
According to CoinGlass, U.S. spot Bitcoin ETFs alone experienced a massive $709 million outflow on Wednesday, the most significant single-day drop since late November of the previous year. Spot Ethereum ETFs faced a similar fate, losing $287 million. It is essential to note that these figures do not account for investment activity within European-listed products.
Jasper De Maere, a desk strategist at crypto market maker Wintermute, commented that Trump’s pivot alleviated some immediate geopolitical concerns that had contributed to earlier selloffs. However, he cautioned that macro risks remain elevated, particularly for the cryptocurrency market.
In terms of market performance, both Bitcoin and Ethereum experienced declines. Bitcoin was trading around $89,000, reflecting a 7.5% drop over the past week, while Ethereum fell 12% to approximately $2,950. Both cryptocurrencies had reached their highest prices in over a month just the previous week.
Carlos Guzman, a research analyst at crypto trading firm GSR, observed that Bitcoin is beginning to resemble a high-beta, risk-on asset, exhibiting trading patterns similar to equities. He emphasized that Bitcoin has yet to establish itself as a store of value or “digital gold” in the minds of many investors.
Market sentiment towards digital asset investment products notably soured last Friday amidst escalating diplomatic tensions. Yet, it should be noted that European investors still contributed a net $113 million into these products last week.
Analysis from investment bank Compass Point indicated that the recent downturn in Bitcoin’s value may be attributed to concerns among short-term holders, who are typically more reactive to price fluctuations. They identified the $98,000 mark as a critical threshold for potential rallies in Bitcoin’s price.
Adding to the overall market pessimism, hopes surrounding the passage of a significant crypto market structure bill have dimmed after Coinbase withdrew its support. Although the White House remains optimistic about the bill passing, De Maere described this withdrawal as a potential short-term catalyst for negative sentiment. Guzman echoed these sentiments, stating, “There was a lot of optimism.”
