Bitcoin ETF outflows continue as Powell’s rejection of rate cuts and high inflation trigger a pullback from institutional investors. Meanwhile, the Ethereum ETF market displays resilience, showcasing strong confidence and investor appetite for purchasing the dip.
While concerns about high inflation potentially impacting investment in the overall crypto market persist, various other factors can help counter this bearish sentiment.
In the realm of Bitcoin ETFs, the effects of inflation are palpable. Ever since the SEC greenlit Bitcoin ETFs in 2024, a new era of collaboration between the crypto sector and conventional finance has emerged. Despite the many benefits reaped from this synergy, recent outflows serve as a stark reminder of the downsides:
Bitcoin ETFs observed daily net outflows, as reported by SoSoValue. Yesterday alone, outflows from the Bitcoin ETF market amounted to $56.76 million, accumulating a total of $243 million in outflows for the week. This trend may seem unexpected following the funds' trajectory towards a significant recovery just a month ago.
Although Bitcoin ETFs recorded their first week of net outflows in 2025 recently, the outflows have persisted. This pattern can be explained by various factors active in the broader market. Notably, industry experts have forecasted that US inflation and economic policies will exert a substantial influence on the crypto market, a prediction that has already begun to materialize. Most recently, Jerome Powell's dismissal of President Trump's proposal for rate cuts to combat inflation has caused uneasiness among investors. The US inflation rate hitting 3% YoY further contributed to the capital retreat from Bitcoin and its ETF market.
Conversely, Ethereum ETFs have bucked this trend by attracting inflows of $12.58 million yesterday, as reported by SoSo Value. Surprisingly, this ETF category seems to benefit from the underlying woes afflicting the asset, unlike Bitcoin. Last week, trading volume surged dramatically as investors seized the opportunity to capitalize on the market dip. Consequently, Ethereum’s sustained low price has fueled ETF inflows to a two-month peak.
While inflation and broader market conditions have prompted a temporary setback for Bitcoin ETFs, they are not the sole determinants at play. In contrast, Ethereum exhibits robust short-term confidence, bolstered by factors such as the anticipated Pectra upgrade in March and recent acquisitions facilitated by World Liberty Financial, a company backed by Donald Trump. Consequently, net inflows could persist in the US spot Ethereum ETF market as long as ETH remains under $3,000.