Liquidation lowdown

You just know that when a Bloomberg analyst is wondering why we don’t have a Fartcoin ETF yet, a downturn can’t be far behind.

Last weekend delivered a selloff for the ages: On Sunday, bitcoin tumbled 15% from the all-time high it had hit just a day earlier, sparking an even bigger wipeout for crypto investments than stocks saw after the 1929 crash, according to MarketWatch.

What happened? The downward spiral kicked off when the trade tensions between the US and China ramped up again, after President Trump surprised markets by announcing (another) 100% tariff on China. Traders were spooked by risks of rising economic uncertainty, leading investors to rotate into safe haven assets like gold, and flee bitcoin and other risk-on investments.

That brings us to the direct catalyst: a massive liquidation event over the weekend, in which roughly $19 billion in leveraged cryptocurrency positions were erased in just 24 hours, while over 1.66 million crypto traders were wiped out.

While bitcoin and ethereum tumbled, both have since recovered a bit of lost ground. But smaller altcoins took bigger hits, with some dropping as much as 80% over the weekend, according to the WSJ.

More demand for ETFs than ever

You might think that with bitcoin’s volatility on full display, investors would shy away from the asset class. But bitcoin and ethereum ETFs, which track the assets’ prices and are backed by the real thing, have been seeing gargantuan inflows, showing there’s just as much interest as ever.

On Monday, fear gripped the market and investors pulled out a combined $755 million from bitcoin and ethereum ETFs. But the tide reversed yesterday, when inflows reached $338.8 million as investors looked to buy the dip. In fact, total inflows into crypto ETFs have reached $48.7 billion this year, already surpassing 2024’s total.

And more and more money is expected to flow into these ETFs once they get the green light from brokerages.

“Brokerage platforms are opening cryptocurrency access to investors, which will help crypto ETFs that are already benefiting from a favorable regulatory environment,” wrote Head of ETF Research Aniket Ullal. The SEC is currently reviewing 92 crypto ETF applications featuring a variety of digital assets, including altcoins like solana, XRP, and many more.

Cryptocurrency volatility isn’t going anywhere—and neither are investors. At this rate, it may only be a matter of time before that Fartcoin ETF becomes a reality.—LB