Investor Caution Rises as Fed Hawkishness Reverses Bitcoin ETF Flows

Bitcoin and Ethereum ETFs See Outflows as Fed Signals Caution

Spot Bitcoin (BTC) ETFs recorded their first daily outflows in over a week on Wednesday, shedding $51.28 million as investors reacted to the Federal Reserve’s cautious guidance on future monetary policy.

The reversal ended a seven-day streak that had seen nearly $3 billion flow into Bitcoin ETFs. Despite the pullback, total assets under management remain above $150 billion, according to SoSoValue data. Market sentiment shifted after Fed Chair Jerome Powell highlighted economic uncertainty and suggested fewer rate cuts ahead than traders had expected.

The Fed’s 25-basis-point rate cut—the first of the year—lowered the benchmark to 4.00%-4.25%. However, updated projections pointed to just two additional cuts in 2025 and fewer in 2026, which market participants interpreted as a cautiously hawkish signal. Powell also emphasized “elevated” inflation and growing “downside risks” to employment, prompting mild pullbacks in risk assets.

Ethereum (ETH) ETFs also saw net redemptions for a second consecutive day, totaling $1.89 million, following $61.7 million in outflows the prior session.

Despite ETF withdrawals, cryptocurrency prices edged higher. Bitcoin gained roughly 0.3%, Ethereum rose 1.7%, and the broader CoinDesk 20 (CD20) index advanced 2%, reflecting selective buying amid investor caution.

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