Bitcoin and Ethereum ETFs Experience Pre-Christmas Outflows as Rising Yields Challenge Crypto Appeal

Ethereum Gains Share in 2025″>Bitcoin and Ethereum exchange-traded funds recorded significant outflows in the days leading up to Christmas 2025, with $589M in Bitcoin and Ethereum Transfers”>BlackRock‘s IBIT Bitcoin ETF and Grayscale’s ETHE Ethereum Trust leading the exodus as institutional investors repositioned ahead of the holiday break.

The outflows mark a continuation of the cooling sentiment toward crypto ETFs that began in late November, with BlackRock’s flagship Bitcoin fund alone shedding approximately $2.7 billion over a five-week period. This represents a stark reversal from earlier in 2025 when the same funds served as primary catalysts for Bitcoin’s rally to new all-time highs above $100,000.

Market data shows Bitcoin trading at $87,750.00 as of Christmas Day, maintaining a modest 0.88% gain over the past 24 hours despite the ETF headwinds. The world’s largest cryptocurrency commands a market capitalization of $1.75 trillion and holds 59.16% market dominance, reflecting its continued strength relative to alternative digital assets even amid institutional selling pressure.

The timing of the outflows coincides with a broader shift in macroeconomic conditions that have made non-yielding assets like Bitcoin and Ethereum less attractive to institutional portfolios. Rising Treasury yields throughout December created compelling alternatives for investors seeking returns, with 10-year Treasury notes offering risk-free yields that compete directly with crypto’s speculative appeal.

“When Treasury yields rise, non-yielding and momentum-sensitive assets like Bitcoin become less attractive because investors can earn safer returns from bonds,” according to market analysts tracking the ETF flows. This fundamental shift in the risk-reward calculus has prompted institutional money managers to reduce their crypto allocations in favor of traditional fixed-income securities.

The crypto ETF landscape, which expanded dramatically following the SEC’s approval of spot Bitcoin funds in January 2024, is experiencing its first major test of investor commitment during adverse market conditions. The same mechanisms that fueled rapid capital inflows during Bitcoin’s ascent are now facilitating equally swift exits as sentiment shifts.

Grayscale’s ETHE Ethereum Trust has faced additional headwinds beyond the macro environment, with regulatory uncertainty surrounding Ethereum’s staking mechanisms creating specific concerns for institutional investors. The SEC’s ongoing scrutiny of staking yields and potential classification issues have contributed to the fund’s underperformance relative to its Bitcoin counterparts.

Trading volumes across crypto ETFs have declined significantly during the Christmas week, reflecting the typical seasonal pattern of reduced institutional activity. However, the magnitude of the outflows suggests broader structural concerns rather than merely holiday-related positioning adjustments.

Looking ahead to 2026, the crypto ETF sector faces a period of consolidation as the market matures beyond its initial launch enthusiasm. While the infrastructure for institutional crypto access has been established, sustained flows will likely depend on clearer regulatory frameworks and more favorable macroeconomic conditions that support risk asset allocation strategies.