Crypto markets weakened this week as bitcoin fell below $109K and ether briefly lost the $4K level, with U.S. spot ETFs for both assets recording record outflows. Yet signs of institutional progress continued, as reports suggested Vanguard may finally allow client access to crypto ETFs and UK banks launched a live pilot of tokenized sterling deposits. Meanwhile, Bitwise filed for the first Hyperliquid ETF, M2 Capital invested $20M in Ethena, and a consortium of nine European banks announced plans for a euro stablecoin. GSR also entered the spotlight with a new ETF proposal targeting digital asset treasury companies, underscoring the rapid mainstreaming of crypto balance sheet strategies.
Bitcoin Slips Below $109K as ETF Outflows Mount Ahead of Inflation Data
Bitcoin fell under $109,000 on Friday, extending a nearly 6% weekly decline as traders braced for the release of U.S. core PCE inflation data. The drop coincided with nearly $1 billion in crypto liquidations and broader weakness across altcoins, with ether posting double-digit weekly losses. Risk appetite for digital assets has cooled as markets await clarity on the Fed’s policy trajectory.
ETF flows highlighted the caution. U.S. spot bitcoin ETFs registered net outflows of $258 million on September 25, with BlackRock’s iShares Bitcoin Trust standing alone in attracting inflows. Ether funds mirrored the trend with $251 million in withdrawals, marking their fourth consecutive session of redemptions. These moves came after several weeks of steady inflows that had buoyed prices earlier this month.
The shift underscores how macro expectations and ETF flows remain intertwined. With bitcoin now 12% below its August peak and ether struggling to stay above $4,000, institutional positioning hinges on whether inflation data cements the case for a September rate cut. Until then, ETF activity will remain the clearest signal of conviction.
Ethereum ETFs Post Record Outflows as ETH Reclaims $4,000
Ethereum ETFs faced their toughest week yet, shedding $795.6 million for the period ending September 26 — the largest outflow since the products launched. BlackRock’s ETHA fund lost $200 million, while Fidelity’s FETH led the week with $362 million in redemptions. The outflows coincided with ether’s brief drop below $4,000, its worst two-day stretch for redemptions since mid-August.
Analysts attributed the downturn to a mix of technical breakdowns, liquidation cascades, and macro uncertainty. Daily redemptions topped $250 million on Thursday and Friday, compounding price declines and highlighting the amplifying role ETFs play during sell-offs. Despite the turbulence, ether remains up over 70% in the past three months, fueled by treasury accumulation and ETF demand.
By Saturday, ETH rebounded modestly to $4,020. The episode illustrates both the upside and fragility of institutional adoption: ETFs have accelerated Ethereum’s rise but have also intensified drawdowns. Sustained recovery will depend on whether inflows return as macro conditions stabilize.
Vanguard Reportedly Weighs Access to Crypto ETFs After Years of Resistance
Vanguard, the world’s second-largest asset manager with $10 trillion in AUM, is considering allowing brokerage clients access to crypto ETFs, according to Crypto in America. While the firm maintains it will not launch its own products, the potential move marks a departure from its 2024 stance when it refused to support spot bitcoin ETFs at launch.
The shift comes amid leadership and regulatory changes. CEO Salim Ramji, a veteran of BlackRock’s ETF division and a known proponent of bitcoin funds, has signaled a cautious but evolving view. Under the Trump administration, the SEC has streamlined listing standards to fast-track crypto ETFs, reducing regulatory friction and spurring adoption among retail and institutional investors.
If confirmed, Vanguard’s entry could significantly expand distribution for crypto ETFs, granting access to a conservative investor base previously excluded from the sector. While not a first mover, Vanguard’s endorsement would further legitimize digital assets as a mainstream portfolio component.
UK Banks Pilot Tokenized Sterling Deposits in Industry-First Initiative
Britain’s largest lenders — including Barclays, HSBC, Lloyds, NatWest, Nationwide, and Santander — have begun a live pilot of tokenized sterling deposits, marking a major step toward programmable money within the regulated banking system. The pilot, launched under the coordination of trade body UK Finance, is set to run until mid-2026 and will test real transactions across multiple use cases.
The initiative will explore three core pilots: person-to-person marketplace payments with enhanced fraud protections, digitized remortgaging processes to speed up conveyancing, and settlement of tokenized assets with tokenized money. The platform is designed for interoperability across new forms of digital money, offering “tokenization-as-a-service” to institutions lacking in-house capabilities.
Building on the Regulated Liability Network concept, the pilot aligns with guidance from Bank of England Governor Andrew Bailey, who urged banks to pursue tokenized deposits over private stablecoin issuance. Unlike stablecoins, tokenized deposits fall within existing deposit protection and regulatory frameworks, offering a safer path to modernization of payments.
Bitwise Files Hyperliquid ETF Proposal as SEC Delays Altcoin Decisions
Bitwise has filed for the first U.S. ETF tracking Hyperliquid’s native token (HYPE), extending institutional exposure to the fast-growing DeFi-focused blockchain. The S-1 filing would allow investors regulated access to HYPE, which underpins one of the most active decentralized perpetual futures venues. The token, however, dropped 11% in the past day to $40.51 amid broader market weakness.
Hyperliquid has rapidly become a leader in decentralized derivatives, recently surpassing $8 billion in daily volume and $2 trillion in cumulative trades since launch. Its unique on-chain order book design has drawn both retail and institutional attention. For Bitwise, the ETF filing reflects its strategy of front-running demand for emerging digital assets.
Meanwhile, the SEC has delayed decisions on several other altcoin ETFs, including spot products for SUI, PENGU, Avalanche, and staked versions of INJ and SEI. The regulator’s backlog remains large despite the adoption of broader listing standards earlier this year, underscoring the intense pipeline of crypto-related proposals.
M2 Capital Invests $20 Million in Ethena Amid Middle East DeFi Expansion
M2 Capital, the proprietary investment arm of UAE-based M2 Holdings, has invested $20 million in Ethena’s governance token ENA, marking one of the region’s largest bets on DeFi infrastructure. Ethena’s synthetic dollar protocol has quickly grown to over $14 billion in TVL, with its USDe stablecoin and yield-bearing sUSDe products seeing strong institutional uptake.
The investment is designed to integrate Ethena’s products into M2’s wealth management platform, targeting institutional and high-net-worth clients across the Middle East. By embedding synthetic dollar yields into a compliant framework, M2 aims to address the demand for yield-bearing instruments within a regulated setting — a key hurdle for DeFi adoption in the region.
Ethena’s model differentiates itself from fiat-backed stablecoins through a crypto-collateralized, delta-neutral design. Its sUSDe token has delivered double-digit returns this year, further strengthening its value proposition. For M2, the deal underscores the Gulf’s ambition to become a global hub for regulated digital asset finance.
Nine European Banks Join Forces to Launch Euro Stablecoin
A consortium of nine major European banks — including ING, UniCredit, Danske Bank, and CaixaBank — has announced plans to launch a euro-denominated stablecoin by 2026. The initiative is designed to provide a trusted European alternative to U.S.-dominated stablecoins and will operate under the EU’s MiCA framework.
The consortium has established a new Dutch company to manage the project and is working with the Dutch Central Bank on regulatory approvals. Once launched, the stablecoin will be available to customers across the bloc, with participating banks offering value-added services such as wallets and custody.
By anchoring the stablecoin within MiCA’s regulatory perimeter, the banks aim to combine compliance with innovation. The move signals Europe’s push to assert strategic autonomy in payments infrastructure and reduce reliance on non-European stablecoins, particularly as demand for regulated digital euros grows.
GSR Files ETF for Digital Asset Treasuries as DAT Momentum Builds
Crypto market maker GSR has filed with the SEC for an ETF tracking companies that hold cryptocurrencies on their balance sheets, reflecting growing institutional appetite for digital asset treasuries (DATs). The fund would invest at least 80% of its assets in equity securities of firms with crypto reserves, similar to the model pioneered by Strategy.
DATs have exploded in prominence over the past year, attracting $20 billion in venture capital funding and reshaping the corporate adoption narrative. Firms such as BitMine and Twenty One Capital have led the charge, holding significant BTC and ETH reserves while using equity issuance and staking strategies to grow NAV per share.
The GSR proposal comes as the SEC faces a backlog of crypto ETF filings, including products tied to Solana, XRP, and Dogecoin. Approval of a DAT-focused ETF would mark another step in mainstreaming corporate crypto strategies, giving investors diversified exposure to a rapidly growing segment of the market.
At Finery Markets, we continue to monitor how evolving regulatory frameworks, monetary policy shifts, and new market infrastructure are shaping digital asset adoption globally. Follow us for deeper insights into institutional flows, stablecoin strategies, and trading technology innovation. This newsletter is provided for informational purposes only and does not constitute investment, financial, or other professional advice.
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