Exchange-traded funds (ETFs) have rebounded after a mid-October slump that triggered massive outflows.
Bitcoin spot ETFs have drawn impressive net inflows, with $202.40 million across the month and $477.20 million in the week ending October 26, 2025. This is quite an impressive haul when you consider it stood at -$418.30 million in September.
The rebound is even more eye-catching when you take into account that there were some huge redemptions triggered by the Bitcoin crash of 10th October. Bitcoin ETFs saw $946 million in Bitcoin redemptions in a matter of days, but the trend has since flipped sharply.
One of the main reasons for this has been a wave of institutional investments. BlackRock’s iShares Bitcoin Trust (IBIT) led the way with $210.9 million in new capital this month, with ARK 21 Shares Bitcoin ETF (ARKB) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) recording $54 million and $52 million, respectively.
Institutional Conviction Builds as ETFs Redefine Market Liquidity
Even after the market shakeup in early October, institutional investors have stuck around, despite retail investors reducing their exposure to Bitcoin and Ethereum spot ETFs. This is despite Bitcoin slumping to a low of $104,782 in early October before rebounding, but institutional inflows into crypto spot ETFs have since picked back up.
ETFs globally attracted $5.95 billion in inflows during the week ending October 4, which coincided with Bitcoin’s surge to an all-time high of $126,279 on October 6. With such numbers, the month was expected to surpass November 2024, which set a record with $6.61 billion in net flows.
However, after the Bitcoin price collapsed and a week of redemptions dumped the enthusiasm, interest cooled for a little over a week before a rebound in institutional inflows towards the end of the month.
Fed Easing Kindles Risk Appetite
The month of October was also significantly influenced by macroeconomic moves. First came the US-China trade tensions, which sent the crypto market into a tailspin and unleashed a wave of ETF outflows.
Fed rate cuts and hikes, dollar strength, and liquidity cycles have become drivers of crypto flows in a way that was uncommon in earlier cycles, where momentum was purely technical.
Investors widely expected that the Fed would cut rates at its 29th October meeting, something that likely contributed to increased inflows towards the end of the month.
Increased Demand for Custody Services
The increase in the number of institutional investors over the last few months has caused demand for custody services to also increase. According to an industry report, the digital asset custody market is projected to grow from $600.28 billion last year to $708.09 billion by the end of this year.
Firms that once treated crypto as a niche are now building roadmaps that assume ongoing, multi-billion-dollar allocations. This has meant looking for secure, scalable, and compliant infrastructure, with many opting for third-party regulated custody.
While on-exchange custody is more convenient for investors who need quick liquidity, it does not allow them to control their private keys. In addition, the safety of assets is usually dependent on the exchange’s solvency.
Last year, hackers stole over $2 billion in crypto from multiple exchanges, including $305 million from DMM Bitcoin. Unlike on-exchange custody, third-party regulated custody provides better security while also allowing operational controls that suit institutions.
Besides security, custody service providers ensure institutions meet legal and compliance requirements. Some even have insurance that’s meant to protect users in the event of asset loss or theft.
Institutions Broaden Bets Beyond Bitcoin
While Bitcoin ETFs lead in institutional AUM, we are starting to see alternative exposures gaining ground. On 29 October 2025, Ethereum spot ETFs closed another day with higher net inflows than Bitcoin spot ETFs.
Ethereum spot ETFs brought in $246.03 million, compared with $202.48 million for Bitcoin. US SOL ETFs also had a good day, finishing with $69.45 million in net inflows.
It’s not often that Ethereum ETFs outpace Bitcoin ETFs. It’s also not the first or second time this happened in October, and it’s a strong signal that institutional investors are diversifying their exposure.
Ethereum finished the month trading around $4,029, which is over 14% below its highs at the beginning of the month. This shows that the coin wasn’t spared by the same macroeconomic news that roiled Bitcoin’s historic run.
However, that hasn’t stopped institutional investors. The largest US Ethereum spot ETF, iShares Ethereum Trust ETF (THA), added $1.155 billion in net inflows through 29 October 2025, bringing its AUM to $16.33 billion. Fidelity Ethereum Fund (FETHA) raised $87.3 million over the same period, while Grayscale Ethereum Trust ETF (ETHE) continued its redemptions, recording $147.6 million in outflows.
What It Means for Investors Going Forward
The wave of institutional flows has, no doubt, shifted the playing field. A lot of the investment is now flowing into regulated assets, and, unsurprisingly, institutional exposure to crypto has coincided with a regulatory push for digital assets.
Additionally, the crypto ecosystem is now more vulnerable to the same macroeconomic events as traditional finance. While Bitcoin’s surge in 2025 was months in the making, with the crypto community actively lobbying for pro-crypto leadership during the 2024 US elections, the crash wasn’t. It took a single social media post by President Trump announcing steeper tariffs on China for the stock market to slump, along with Bitcoin and Ethereum prices.
The surge in October inflows and increased demand for custody show that institutions are ready for regulated exposure.
Like private investors, many institutional investors blinked and reduced exposure starting on October 10. FETH recorded 5 straight days of outflows before bringing in $154.6 million, which shows that macro alignment now matters as much as upside potential.
