Cryptocurrency ETF evaporates 68 billion in two months! BlackRock's fee income plummets 28%

After the $19 billion crypto liquidation event in October 2025, crypto ETF funds experienced severe outflows. As of November 21, the net asset value (NAV) of Bitcoin ETFs shrank from $164.5 billion to $110.1 billion, with the combined crypto ETF NAV evaporating by about $68 billion. BlackRock Bitcoin and Ethereum ETF annualized fee revenue fell by 28% and 38%, respectively.

$19 Billion Liquidation Triggers Massive Fund Outflows

(Source: SoSoValue)

The largest crypto liquidation event in history reached $19 billion, leaving the crypto market shaken. This liquidation storm in mid-October originated from Trump’s sudden announcement of a 100% tariff on Chinese imports, triggering turmoil across global financial markets. As a high-risk asset class, crypto was hit first, with over $20 billion in leveraged positions forcibly liquidated within hours.

The destructive power of this liquidation was not just in its scale, but in the chain reaction it set off. As a large number of leveraged longs were liquidated, selling pressure drove Bitcoin and Ethereum prices down sharply, triggering more liquidations and creating a “liquidation spiral.” Ultimately, Bitcoin plunged from an all-time high of $125,761 in early October to about $90,000 in late October—a drop of over 28%. Ethereum fell even harder, dropping from around $5,000 to near $3,500—a 30% decline.

Crypto ETF holders faced a double blow. First, asset prices fell directly, shrinking the NAV of their ETF shares along with Bitcoin and Ethereum prices. Second, market sentiment collapsed, and panic selling led many investors to redeem their ETF shares and exit. In the seven weeks following the liquidation, Bitcoin and Ethereum ETFs saw outflows in five of those weeks, totaling more than $5 billion and $2 billion respectively.

Double Impact of the Liquidation Event on ETFs

Price Drop: BTC down 28%, ETH down 30%, ETF NAV shrinks in tandem

Panic Redemptions: Outflows in five of seven weeks, totaling over $7 billion

Asset Evaporation: BTC ETF falls from $164.5B to $110.1B (down 33%)

ETH ETF Halved: from $30.6B to $16.9B (down 45%)

As of November 21, Bitcoin ETF NAV shrank from about $164.5 billion to $110.1 billion; Ethereum ETF NAV was nearly halved from $30.6 billion to $16.9 billion. This drop was partly due to the price decline of Bitcoin and Ethereum themselves, as well as some tokens being redeemed. In less than two months, the combined NAV of crypto ETFs evaporated by about $68 billion, shrinking the overall market by a third.

Fee Rates Decide Life or Death: Grayscale Bleeds from High Fees

The retreat in fund flows reflects not only investor sentiment but also directly affects the fee income of ETF issuers. Spot Bitcoin and Ethereum ETFs are “money machines” for issuers like BlackRock, Fidelity, Grayscale, and Bitwise. Each fund charges fees based on AUM, usually as an annual rate but calculated daily based on NAV.

Every day, trust funds holding Bitcoin or Ethereum sell a portion of their holdings to cover fees and other expenses. For issuers, this means annual revenue is roughly AUM times the fee rate; for holders, it means their token amount is gradually diluted over time.

Crypto ETF issuer fee rates range from 0.15% to 2.50%. This huge gap determines the fate of different issuers. BlackRock and Fidelity products charge 0.25%, among the industry’s lowest. Grayscale’s early products charge 1.50% for GBTC and a whopping 2.50% for ETHE, 6 to 10 times higher than low-cost ETFs.

Grayscale’s story is a “legacy problem.” Once, GBTC and ETHE were the only large-scale options for US investors to gain Bitcoin and Ethereum exposure through brokerage accounts. But as BlackRock and Fidelity led the market, Grayscale’s monopoly ended. To make matters worse, the high fee structure of its early products has led to persistent outflows over the past two years.

The performance of crypto ETFs in October–November illustrated investor preference: when markets are strong, money moves to lower-fee products; when markets weaken, positions are slashed across the board. Grayscale’s high fees inflate revenues but drive investors away and shrink AUM. Remaining funds are often stuck due to tax, investment mandates, or operational friction—not investor choice.

BlackRock’s Annual Revenue Slashed 28%: Scale Becomes a Disadvantage

(Source: SoSoValue)

Looking at individual issuers, fund flows reveal three slightly different trends. For BlackRock, the business is characterized by both “scale effect” and “cyclical volatility.” Its IBIT and ETHA have become the default choices for mainstream investors seeking Bitcoin and Ethereum exposure via ETFs. This allows the world’s largest asset manager to collect 0.25% on a huge asset base—especially lucrative when assets hit record highs in early October.

But this also means that when major holders de-risk in November, IBIT and ETHA are the first to be sold. The numbers tell the story: BlackRock’s Bitcoin and Ethereum ETF annualized fee income dropped 28% and 38%, both exceeding the industry average declines of 25% and 35%. This “scale advantage becomes a disadvantage” phenomenon shows that in bear cycles, the biggest ETFs are the first for institutions to cut, due to their superior liquidity and ability to execute large sales without greatly impacting price.

Fidelity’s situation is similar to BlackRock’s, but on a smaller scale. Its FBTC and FETH funds also followed the “inflow-then-outflow” pattern, with October’s enthusiasm replaced by outflows in November. However, the smaller scale means Fidelity was hit a bit less, a “just right” advantage.

Based on weekend AUM, annualized fee revenue for Bitcoin ETFs fell over 25% in the past two months; Ethereum ETF issuers were hit even harder, with annualized revenue down 35% over the past nine weeks. On October 3, total AUM for Bitcoin and Ethereum ETF issuers hit $195 billion; with their fee levels, the fee pool was considerable. By November 21, remaining assets had dropped to just $127 billion.

Covered Call and Staking Products: Lifeline for Issuers?

The spot crypto ETF market in October–November shows that ETF management, like the underlying asset market, is cyclical. When prices and sentiment are up, inflows boost fee income; but if the macro environment changes, funds exit quickly. Major issuers may have built efficient “fee channels” on Bitcoin and Ethereum, but the volatility of Oct–Nov shows even these are not immune to market cycles.

For issuers, the core challenge is how to retain assets in new downturns and avoid fee income swinging wildly with economic winds. While issuers can’t stop investors from redeeming shares in a selloff, income-generating products can cushion downside risk to some extent.

Covered call ETFs can provide investors with premium income to offset some underlying losses. The covered call is an options strategy where an investor holding the asset sells a matching number of call contracts. This strategy aims to boost returns or hedge risk by collecting premiums. In equities, covered call ETFs like JEPI and QYLD are popular, as they provide steady cash flow even in sideways or falling markets.

Staking products are another viable path. Ethereum uses a proof-of-stake mechanism, allowing holders to earn an annual yield of about 3% to 5% through staking. If crypto ETFs can pass staking income to holders, it would greatly enhance product appeal. In down markets, staking can partially offset price losses; in up markets, it boosts total returns.

However, such products need regulatory approval before launch. The SEC has stricter standards for ETFs involving derivatives or staking, requiring investors to fully understand risks and have proper protections. Several issuers have already filed for Bitcoin covered call ETFs and Ethereum staking ETFs; the market awaits SEC decisions.

Frequently Asked Questions (FAQ)

Why did crypto ETF funds suddenly see massive outflows?

In mid-October, Trump announced a 100% tariff on China, triggering a $19 billion liquidation event. Bitcoin plunged from $125,761 to $90,000 (down 28%), and panic selling led to outflows in five of seven weeks, totaling over $7 billion.

Can issuers still make money?

Yes, but revenue has dropped sharply. BlackRock’s fee income is down 28%, Ethereum products down 38%. As long as AUM is positive and fees are charged, issuers have income. The key is retaining assets in down cycles to avoid ongoing revenue shrinkage.

Why is Grayscale losing assets the most?

GBTC charges 1.50%, ETHE charges 2.50%—6–10 times BlackRock and Fidelity’s 0.25%. In bull markets, investors tolerate high fees; in bear markets, they immediately switch to low-cost products. Grayscale has continuously bled assets for two years, and its market position has been replaced.

What new types of crypto ETFs might launch in the future?

Covered call ETFs (boosting yield by selling options for premiums) and staking ETFs (passing Ethereum staking yield to holders) are two big directions. Multiple issuers have filed applications, awaiting SEC approval.

Is now still a good time to buy crypto ETFs?

It depends on risk tolerance and investment horizon. The short term remains volatile, but long term, institutionalization is irreversible. It’s recommended to choose low-fee products (0.15%-0.25%) like IBIT or FBTC and avoid high-fee Grayscale legacy products.