Crypto ETFs Hammered by $1.5B Hack, Market Sell-Off

Investors have pulled more than $1 billion from U.S.-listed cryptocurrency ETFs over the past few days, reacting to big sell-offs in digital assets triggered by a heightened risk-off sentiment. 

Bitcoin prices fell sharply Tuesday, briefly dipping as low as $86,500 for the first time in three months. Major cryptocurrencies like Ether and Sol followed suit, shedding double-digit percentages in a volatile trading session.

Contributing to investor jitters was the recent hack of Bybit, one of the world’s largest crypto trading platforms, which led to the theft of $1.5 billion worth of ether, the token for the Ethereum network. The security breach heightened investor concerns, prompting a flight to safety across crypto markets.

A sell-off in broader financial markets also weighed on sentiment in the crypto markets. The Invesco QQQ Trust (QQQ) was down for a fourth-straight session on Tuesday as investors fretted about potential tariffs and tepid economic data. 

Reflecting this cautious mood, exchange-traded funds tracking cryptocurrencies saw significant redemptions. Over the past week, investors have pulled $1.2 billion out of cryptocurrency ETFs, including almost $600 million on Friday alone, the day of the Bybit hack.

FBTC, IBIT Outflows

The Fidelity Wise Origin Bitcoin Fund (FBTC) recorded the largest weekly outflow at $412 million. That was followed by the iShares Bitcoin Trust (IBIT), the Grayscale Bitcoin Trust ETF (GBTC), the Bitwise Bitcoin ETF (BITB), and the ARK 21Shares Bitcoin ETF (ARKB), each with outflows ranging between $107 million and $181 million.

Still, despite the recent turmoil, flows for U.S.-listed crypto ETFs remain in positive territory on a year-to-date basis, with IBIT leading the pack. 

The ETF accounts for $3.5 billion of the $4.2 billion of net inflows for the asset class in 2025. The iShares Ethereum Trust ETF (ETHA) is next, with year-to-date inflows of $875 million.

Ether has significantly underperformed bitcoin so far this year, shedding 29% versus 7%. The cryptocurrency has been in the doghouse as investors debate the Ethereum blockchain’s structure and potential usefulness. 

Excitement about DeFi, NFTs and all the other Ethereum-centric crypto applications has died down, sapping ether’s momentum and contributing to the overall skepticism surrounding the platform.

This isn't the first time Ethereum has faced skepticism, and the narrative surrounding the blockchain could quickly turn around under the right circumstances.