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Bitcoin ETFs recorded $51.28 million in outflows, their first in over a week, after the Federal Reserve’s cautious policy outlook dampened investor sentiment.
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Ethereum ETFs also saw redemptions for a second straight day, losing $1.89 million, even as crypto prices edged higher with Bitcoin up 0.3% and Ether gaining 1.7%.
Spot bitcoin ETFs faced their first daily setback in over a week on Wednesday, recording net outflows of $51.28 million. The reversal came after the Federal Reserve delivered its much-anticipated interest rate cut but paired it with a more cautious outlook that rattled investor confidence.
According to SoSoValue data, the outflows broke a seven-day streak during which bitcoin ETFs had attracted nearly $3 billion in inflows, pushing assets under management above $150 billion.
Fed’s “Hawkish Cut”
As widely expected, the Fed reduced its benchmark interest rate by 25 basis points, bringing it down to a range of 4.00%–4.25%. However, the central bank’s updated projections revealed fewer rate cuts ahead than markets had priced in. Officials now anticipate just two further cuts in 2025 and even fewer in 2026, signaling a slower path to easing.
In his press conference, Fed Chair Jerome Powell emphasized lingering risks, noting that inflation remains “elevated” while employment faces “downside risks.” The remarks struck a more hawkish tone than investors had hoped for, dampening enthusiasm for risk assets including cryptocurrencies.
Markets interpreted the move as a hawkish cut, one that lowers rates but simultaneously warns of policy caution, leaving traders reassessing their positions.
Ethereum ETFs Follow Suit
The cautious mood extended to Ethereum ETFs, which logged $1.89 million in outflows on Wednesday, marking their second consecutive day of redemptions. This followed a much larger $61.7 million outflow the day before. The withdrawals reflect investors’ hesitation amid mixed signals from the Fed and broader uncertainty around the crypto market’s next direction.
Despite the ETF outflows, underlying crypto prices showed resilience. Bitcoin rose 0.3% in the past 24 hours, while ether climbed 1.7%. The broader CoinDesk 20 (CD20) index also gained 2%, suggesting that spot market participants remain cautiously optimistic even as institutional ETF flows turn negative.
The recent moves highlight the delicate balance between optimism for digital assets and the realities of global monetary policy. Bitcoin’s strong ETF inflows earlier this month reflected investor confidence in the asset’s long-term prospects.
However, the sudden reversal serves as a reminder that regulatory and macroeconomic headwinds can quickly reshape sentiment.
For Ethereum, ETF outflows reinforce the token’s struggle to match bitcoin’s institutional traction, even as ether’s price sees moderate gains. Analysts suggest the coming weeks will hinge on whether inflation data and Fed communication support a more dovish narrative, potentially reigniting ETF inflows.
For now, the crypto market remains on edge, buoyed by resilient spot prices but tested by institutional caution. As the Fed’s stance grows clearer in the months ahead, investors will be watching closely to see if ETF flows recover or if this marks the start of a deeper pullback.
