US spot Bitcoin exchange-traded funds suffered $450.4 million in net outflows on Tuesday, following $159.9 million in net inflows the prior day, as selling pressure mounted across the marketplace for cryptocurrencies.
That same day, the funds experienced their largest daily investment outflows since June 25, when a record $691.7 million exited, according to Farside Investors.
The largest redemptions on Tuesday came from Fidelity Bitcoin’s Wise Origin Bitcoin Fund, which lost $214.8 million from its FBTC, and Blackrock’s iShares Bitcoin Trust, which saw redemptions of $161.7 million. Grayscale Bitcoin Trust ETF saw $44.1 million in redemptions, with the ARK 21Shares Bitcoin ETF and Bitwise Bitcoin ETF seeing redemptions of $17.4 million and $12.4 million, respectively, largely reversing Monday’s inflows.
It unfolded as Bitcoin, the largest crypto by market cap, was struggling again and was trading near $75,900 at press time, down around 2.3% in the past 24 hours. BTC had climbed to as high as $77,710 and dropped as low as $74,945 before falling below the $76,000 level again.
The sell-off was compounded after the US Senate on Tuesday failed to move forward with the Digital Asset Market CLARITY Act, which would have established a federal framework for digital-asset markets.
The procedural motion failed with 49 in favor and 50 against, less than the 60 votes required to pass a procedural motion, killing a bill that had been the result of more than a year of negotiations and amendments.
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The bill was drafted to provide clarity on how US financial regulators determine whether and how to regulate digital assets, including the roles of the Securities and Exchange Commission and Commodity Futures Trading Commission.
Proponents of the legislation argued this provided clearer rules for crypto businesses and investors; critics pointed out concerns that remain present in the final law.
This was not a final rejection of the bill; Senator Thom Tillis voted against it as a procedural move to keep open the option to reconvene later.
Yet it was an abrupt change for the market, which had a positive start to this week with Monday’s fund flows, and the mix of uncertainty around legislation, falling Bitcoin prices, and continued ETF redemptions contributed.
Before Congress cast their votes on the legislation, the sponsors released a final version of the bill, which incorporated 126 amendments sought by Democrats. The final bill added ethics provisions, gave state attorneys general a bigger role in enforcement, and increased the authority of the Treasury secretary to limit deposit flight from payment stablecoins.
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Earlier drafts also clarified the registration requirements for some non-DeFi protocols, and provided for credit unions.
The Senate setback came after months of debate over competing proposals on how to regulate crypto assets and when they fall under US securities and commodities trading laws, with the legislation seeking to clarify the dividing line between the two.
