U.S. Spot Bitcoin ETFs Stumble as Trump's Tariff Drama Rattles Investors

Holy smokes, the U.S. spot Bitcoin ETFs took a wild ride on May 29, crashing their epic 10-day inflow streak as investors hit the brakes amidst a whirlwind of uncertainty surrounding Donald Trump's trade policy. Talk about a rollercoaster!

According to the data wizards at SoSoValue, a whopping $358.65 million bolted out of the 12 U.S.-listed spot Bitcoin ETFs that day, marking the first net outflow since mid-May. This sharp U-turn came after a mind-blowing run that saw over $4.2 billion pour into these funds in just 10 days. Whoa, that's some serious cash!

Leading the charge of the outflows was Fidelity's FBTC, with a jaw-dropping $166.32 million in investor redemptions. Not far behind was Grayscale's GBTC, shedding $107.53 million, while ARK 21Shares' ARKB and Bitwise's BITB lost $89.22 million and $70.85 million, respectively. Ouch, that's gotta hurt!

Other funds like Invesco's BTCO, VanEck's HODL, Valkyrie's BRRR, and Franklin Templeton's EZBC also felt the pain, bleeding out a combined $49.83 million in smaller outflows. It's like a crypto bloodbath out there!

But wait, it wasn't all doom and gloom. BlackRock's IBIT stood tall, pulling in $125.09 million in inflows. Some investors are clearly seeing this dip as a golden opportunity to buy the dip. Smart move or risky gamble? Only time will tell!

Despite the brutal one-day outflow, May has still been a beast of a month for Bitcoin ETFs, with net inflows reaching around $5.85 billion. That's nearly double what we saw in April! For context, February and March were a total snooze fest with net outflows of $3.56 billion and $767.91 million, respectively. Talk about a comeback!

Get this: while Bitcoin ETFs have been raking in nearly $9 billion over the last five weeks, traditional gold-backed ETFs have been bleeding out over $2.8 billion. It's like investors are saying, "See ya later, gold! Bitcoin's where it's at!" More and more folks are starting to see Bitcoin as the real deal for storing value and fighting inflation. Gold who?

So, what the heck triggered this sudden shift? Many are pointing fingers at the ongoing tariff saga involving former President Trump. A federal appeals court just yanked Trump's tariffs on the European Union back into play, mere hours after a lower trade court said they were a no-go. Now, the administration's gearing up to ask the Supreme Court to put that ruling on ice, and they might do it as early as Friday. Talk about a legal rollercoaster!

This back-and-forth in court has sent shockwaves of uncertainty through U.S. trade policy. Trump's "reciprocal tariff" approach, which basically says, "You hit us, we hit you harder," has been causing all sorts of drama with our allies and trading partners. Investors are freaking out, worried that a return to these aggressive tariff policies could send costs soaring and reignite inflation. Hold on tight, folks!

Markets React

In the wake of this chaos, Bitcoin's (BTC) price took a nosedive, hitting a session low of $105,332 on May 30 before clawing its way back up to just above $106,000. That's a 1.7% drop in 24 hours, but hey, the king of crypto is still hanging within 5% of its all-time high of $111,891 from earlier this month. Not too shabby!

Crypto-related stocks had a wild day, too. Coinbase (COIN) took a 2.14% hit, while MicroStrategy (MSTR) managed to squeeze out a 1.7% gain. Bitcoin miners got rocked, with Bitfarms (BITF), Bit Digital (BTBT), CleanSpark (CLSK), and Greenidge (GREE) all dropping by around 3-5%. It's a tough world out there for these guys!

Meanwhile, traditional U.S. equities also gave back most of the gains they made after the initial court ruling blocking Trump's tariffs. With all this legal uncertainty still hanging over our heads, markets across the board seem to be hunkering down in wait-and-watch mode. Keep your eyes peeled, folks!

"The recent activity appears more indicative of a correction rather than a bearish reversal," Ruslan Lienkha, the bigwig of markets at YouHodler, told us, adding that Bitcoin will likely keep dancing with major U.S. tech indices in the medium term thanks to their shared sensitivity to macroeconomic factors like interest rates and liquidity. But, he added, "this correlation may gradually weaken over time" as Bitcoin matures into its own beast with unique market drivers. Keep evolving, Bitcoin!

"Given these dynamics, it is likely that BTC will continue to trade within this range for some time, potentially building a solid foundation for the next leg higher toward a new all-time high," Lienkha said. Sounds like Bitcoin's got its sights set on the moon! Buckle up, crypto fans, it's gonna be a wild ride!