Bitcoin ETFs Weaken as AI Risk Emerges

Cryptocurrency News

7 min read time

|Updated: 2026-10-08

As of October 8, the crypto market is showing a cautious outlook, with Bitcoin trading at around $82,700 and Ethereum near $2,560. Bitcoin ETFs recorded their largest daily net outflow since June, while softer US employment data is reducing expectations for another Federal Reserve rate hike in October. On the technology side, Vitalik Buterin is warning that AI-assisted mathematical advances could weaken the resilience of some cryptographic systems in the future.

Market Perspective: Fund Flows Weaken as Rate Expectations Soften

After declining by more than 2% on October 7 and moving toward the $83,000 region, Bitcoin price is trading at around $82,700 on October 8. Ethereum has also moved toward $2,560 over the same period. Alongside substantial ETF outflows, elevated bond yields show that reduced expectations for another rate hike have not yet translated into clear relief for the crypto market.

US nonfarm payrolls increased by only 29,000 jobs in September, while the unemployment rate remained at 4.2%. The core PCE price index for August rose 0.2% month over month and 3.0% year over year. Softer employment data has reduced expectations that the Fed will raise rates again at its October 27–28 meeting, while inflation remaining above the 2% target means monetary policy uncertainty has not disappeared entirely.

ETF Flows: Bitcoin Records Its Largest Outflow Since June

According to Farside data, US spot Bitcoin ETFs recorded $484.9 million in net outflows on October 7. This was the largest daily net outflow since the $691.7 million recorded on June 25. Bitcoin ETFs had attracted $118.8 million in net inflows just one day earlier.

Spot Ethereum ETFs recorded $160.9 million in net outflows on the same day. Across the three trading sessions from October 5 through October 7, Bitcoin ETFs recorded approximately $455.9 million in net outflows, while Ethereum ETFs lost approximately $413.6 million. Combined three-day outflows across the two asset groups therefore reached approximately $869.5 million.

A large single-day outflow is not enough on its own to determine the direction of long-term institutional demand. However, Bitcoin ETFs moving to approximately $163 million in net outflows over the first five trading sessions of October show that short-term fund flows have shifted toward a more cautious picture.

Bitcoin ETFs See $485 Million in Outflows

The $484.9 million outflow on October 7 stood out not only because of its size, but also because withdrawals were spread across multiple funds. Farside data shows that the largest individual outflow of the day was $207.7 million, while daily withdrawals of more than $100 million were recorded in other Bitcoin ETFs as well.

The move came immediately after $118.8 million in net inflows in the previous session. Daily ETF flows have therefore changed direction over a short period. Bitcoin’s move toward the $83,000 region during the same period shows that fund outflows coincided with weaker spot pricing, but ETF data alone is not sufficient to establish the cause of the price move or predict its next direction.

What matters in the coming sessions is whether the large October 7 outflow remains a one-day repositioning event. Continued large outflows over consecutive sessions could make the short-term weakening in institutional demand more pronounced, while a return to positive flows could suggest that the daily move was temporary.

A Wait-and-See Scenario Gains Ground at the Fed

Market pricing based on CME FedWatch data shows that the probability of the Fed raising rates on October 28 has fallen to 18.3%. That figure stood at 37.6% on September 30. A rate cut is not the central scenario under current pricing; the market predominantly expects the policy rate to remain unchanged.

The shift in expectations follows September’s limited 29,000 increase in employment and a 0.2% monthly rise in core PCE in August. However, these data do not show that the Fed’s tightening cycle has definitively ended. Minutes from the September FOMC meeting, released on October 7, show that most participants believed another rate increase would likely be appropriate by year-end.

At its September meeting, the Fed raised the policy rate by 25 basis points to a range of 3.75%–4.00%. The minutes also show that policymakers emphasized that future decisions would remain dependent on incoming data. Holding rates steady in October therefore would not mean that the possibility of another increase in December or at a later meeting had been eliminated.

For Bitcoin, a lower probability of a near-term rate increase could mean less additional pressure on funding conditions. However, as long as bond yields remain elevated and inflation stays above target, FedWatch probabilities alone are not enough to draw conclusions about the direction of crypto assets.

AI Opens a New Risk Area for Cryptography

Ethereum co-founder Vitalik Buterin said AI-assisted mathematical research could weaken the security assumptions behind some lattice-based cryptography methods over the next two years. Lattice-based systems underpin some newer cryptographic methods designed in particular to provide resistance against quantum computers.

The discussion is not limited to post-quantum methods. Ethereum researcher Justin Drake has also raised the scenario that elliptic-curve-based digital signatures used by systems such as Bitcoin and Ethereum could eventually be affected by AI-assisted mathematical advances. However, there is currently no verified security incident showing that AI has broken the fundamental signature systems used by Bitcoin or Ethereum.

Buterin specifically said that users should not rush to move their assets to different wallets today. The warning concerns long-term cryptographic preparedness rather than an ongoing attack. The greater emphasis on hash-based signature methods in Ethereum’s long-term Lean roadmap can also be viewed as part of the technical preparation for addressing these risks at an early stage.

It would therefore be inaccurate to conclude that “AI will break crypto within two years.” The two-year period reflects Buterin’s assessment of the risks associated with potential mathematical advances; it is not a confirmed timeline or evidence of an existing security breach.

CoinTR Insight

Today’s three developments show that short-term capital conditions and long-term technological resilience need to be assessed separately in the crypto market. ETF outflows reflect short-term institutional fund movements, while Fed expectations indicate how the cost of capital could evolve. The discussion around AI and cryptography, meanwhile, brings the long-term security requirements of blockchain infrastructure into focus independently of price movements.

During periods when fund flows can change direction quickly and macro uncertainty remains elevated, liquidity and order management remain important. CoinTR’s deep liquidity infrastructure and strong USDT/TRY trading flow are among the infrastructure features that support more controlled and gradual transaction management as market conditions change.

Forward-Looking Takeaway

Continuation of ETF flows: Whether the $484.9 million Bitcoin ETF outflow recorded on October 7 continues in subsequent sessions will be closely watched. A return to positive flows could indicate that the latest move was limited to short-term repositioning.
October 14 inflation data: US consumer inflation data for September will be released on October 14. The figures will be important in reshaping interest-rate expectations ahead of the Fed’s October 27–28 meeting.
The Fed’s next move: Holding rates steady in October has become the main market expectation, while the FOMC minutes show that the possibility of another increase by year-end remains. New employment and inflation data will help determine the balance between these two views.
Cryptographic preparedness: There is currently no verified cryptographic break resulting from AI-assisted mathematical advances. The next important development will be whether research uncovers a concrete weakness in existing cryptographic methods and how blockchain protocols adapt their long-term security roadmaps in response.

2026-10-08

Legal Notice

The information, comments, and evaluations contained in this content do not constitute investment advice. This content is not intended to be prescriptive in any way and is intended to provide general information. It does not constitute investment advice. CoinTR cannot be held responsible for any transactions made based on this information or any losses that may arise.

The Pace of ETF Launches in the Crypto Market Limited Bitcoin Moves and New Regulatory Steps prevIcon

Recommended