Even BlackRock Can't Withstand It? BTC ETFs See $3.5 Billion Outflow in a Single Month as Institutions Quietly “Deleveraging”

Original translation: Luke, Mars Finance

When ETFs Fall into “Deficit”

Historically, November has always been a mixed month for cryptocurrencies, and this year is no exception, marking a sharp contrast to the past two years.

BTC and ETH closed down 17% and 22% respectively this month, while in November 2024 they rose by 37% and 47%. While last year’s gains can be attributed to the frenzy following Donald Trump’s re-election as US President, in November 2023 they also increased by 9% and 13% respectively.

This November’s crypto plunge was driven by a broader market crash over the past two months, propelled by tariff wars and macroeconomic uncertainty.

This contrast is especially pronounced on the 2025 and 2024 exchange-traded fund (ETF) data panels.

In November 2024, spot Bitcoin ETFs attracted about $6.5 billion in net inflows, while Ethereum ETFs added $1 billion. At that time, ETF issuers held over $105 billion in Bitcoin and $11 billion in ETH wrapped products. Twelve months later, in November 2025, BTC ETFs saw about $3.5 billion in net outflows. Ethereum wrapped products lost about $1.4 billion. For these two flagship wrapped products, there was a roughly $12 billion negative reversal in monthly demand.

On paper, ETF issuers today are indeed managing more assets than a year ago. Cumulative net inflows are positive, and total assets have increased, at least slightly. But ETF fund flows have shifted from “green” (inflows) to “red” (outflows) over the past few months, highlighting how much issuers are losing in fee collections.

In this week’s quantitative analysis, I’ll examine how the three major sponsors (issuers) of BTC and ETH spot ETFs performed when both demand and prices for the underlying assets fell.

In the first two weeks of October, spot Bitcoin ETFs attracted $3.2 billion and $2.7 billion respectively—the highest and fifth highest weekly inflows of 2025.

Before that, BTC ETFs seemed poised to finish the second half of 2025 without a single week of consecutive outflows.

Then, the most severe crypto liquidation event ever occurred. The crypto market is still reeling from the evaporation of $19 billion in assets.

ETH ETFs also attracted $1.8 billion in net inflows during the same period.

In the seven weeks following the liquidation event, both BTC and ETH ETFs saw outflows in five of those weeks, totaling over $5 billion and $2 billion respectively.

During the week ending November 21, the net asset value (NAV) held by BTC ETF issuers fell from about $164.5 billion to about $110.1 billion. ETH ETF NAV dropped nearly 50%, from about $30.6 billion to about $16.9 billion. Part of this loss came from the decline in BTC and ETH prices, and the rest from tokens being completely withdrawn from wrapped products. Combined, the BTC and ETH ETF portfolios lost about a third of their NAV in less than two months.

The decline in flows tells us more than just investor sentiment. It directly impacts the revenue earned by ETF issuers/sponsors through fees.

Spot Bitcoin and Ethereum ETFs are revenue machines for issuers like BlackRock, Fidelity, Grayscale, and Bitwise. Each fund charges a fee on its assets, usually quoted as an annual percentage, but accrued daily on net asset value.

Every day, the trust holding BTC or ETH shares sells a portion of its holdings to pay fees and other expenses. For issuers, this means the annualized revenue run rate equals assets under management (AUM) multiplied by the fee rate. For holders, it means tokens are gradually diluted over time.

ETF issuer fees range from 0.15% to 2.50%.

Redemptions or outflows themselves do not directly make issuers money or cause losses. However, outflows reduce the assets issuers hold at the end of the day, which is the basis for their fees.

On October 3, BTC and ETH ETF issuers collectively held $195 billion in assets. At the above fee levels, this represents a very healthy fee pool. By November 21, the same products held only about $127 billion in assets.

If annualized fee income is calculated based on weekend AUM, projected income for BTC ETFs has dropped by more than 25% over the past two months.

ETH ETF issuers have been hit harder, with annualized income dropping 35% over the past nine weeks.

The Bigger the Issuer, the Harder the Fall

Zooming out to the issuer level, flows tell three slightly different stories for each ETF issuer.

For BlackRock, it’s a story about scale and cyclicality. IBIT and ETHA have become the default tools for investors seeking mainstream BTC and ETH exposure through the ETF route. This gives the world’s largest asset manager a huge base to collect its 25 basis point fee, especially when AUM hits record highs as it did in early October. But it also means that when whales want to de-risk in November, IBIT and ETHA are obvious sell targets.

This is clear: BlackRock’s annualized fee income from BTC and ETH ETFs dropped 28% and 38% respectively, outpacing the issuer average declines of 25% and 35%.

Fidelity’s experience mirrors BlackRock’s, only on a smaller scale. FBTC and FETH followed the same inflow-outflow rhythm, with October’s enthusiasm giving way to November’s red bars.

Grayscale’s story is more about legacy issues. Once upon a time, GBTC and ETHE were the only scalable ways for many US investors to hold BTC and ETH in a brokerage account. As BlackRock and Fidelity take the lead, that monopoly is gone. Making it worse for Grayscale is the high fee structure of its initial wrapped products. This has led to a long-term outflow trend over the past two years.

The October-to-November period also reflected this investor behavior. In good times, they rotate capital to cheaper wrapped products, and in bad times, they cut risk across the board.

Grayscale’s initial crypto wrapped products charge fees six to ten times higher than low-cost ETFs. While this helps inflate its revenue line, the expense ratio drives investors away and squeezes its fee-earning AUM base. Every dollar left is usually due to friction costs like taxes, authorization, or operational hassle, not investor preference. Every dollar that leaves is a fresh reminder: whenever there’s a clean option, more holders are voting against high-fee wrapped products.

All these ETF charts tell us a few things about the current stage of crypto institutionalization.

Spot ETFs before and after October and November show that running a crypto ETF business is cyclical, just like the market for underlying assets. When prices are high and headlines are favorable, more flows translate to higher fee income. When macro conditions shift, it all flows out quickly.

Large sponsors have built efficient “toll roads” on top of BTC and ETH, but October and November show that these roads are not immune to the cycle. For issuers, the key to the game is to retain assets through the next shock, so that the fee meter doesn’t swing 25-35% every time the macro wind shifts.

While issuers cannot prevent investors from redeeming during selloffs, yield-generating products can cushion some of the downside.

Covered-call ETFs can provide investors with premium income, helping offset some of the declines in the underlying asset’s price. Staked wrapped products can also be an option. However, such products must pass regulatory review before launching.