Bitcoin investment products saw substantial outflows last week, totaling $430 million, marking the first major decline of 2025.
Bitcoin investment products saw substantial outflows last week, totaling $430 million, marking the first major decline of 2025. The outflows were concentrated in Bitcoin products, primarily spot ETFs, as Federal Reserve Chair Jerome Powell's cautious stance on rate cuts and a higher-than-expected inflation report sparked renewed concerns. The outflows ended a remarkable 19-week streak of inflows that began in the wake of the 2024 U.S. presidential election, with Bitcoin products alone seeing $29 billion in inflows during that period. Last week, inflation for January accelerated to 3%, with the "core" inflation rate jumping to 5.5% year-over-year, further complicating the Fed's battle to tame inflation.
CoinShares’ Head of Research, James Butterfill, noted that Bitcoin is highly sensitive to rate cut expectations and was hit hardest by these developments. Despite this, the outflows were somewhat softened by inflows into alternative digital assets such as Solana, XRP, and Sui. These altcoins collectively saw a significant uptick; Solana led with $8.9 million, followed by XRP with $8.5 million, and Sui with $6 million. The recent optimism surrounding these assets is partly due to growing speculation about the potential approval of their respective exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), with analysts predicting a 75% chance of approval for Solana and 65% for XRP.
The broader digital asset market saw a net outflow of $415 million last week, the first since the start of the year. Bitcoin’s price dipped 1.4%, settling around $96,900 after fluctuating between $94,900 and $98,600. However, despite last week's setbacks, Bitcoin products continue to dominate crypto investment flows, with Bitcoin investment products accounting for 80% of the $6.9 billion in total inflows to digital asset investment products in 2025.
Ethereum, despite being overshadowed by Bitcoin, also attracted attention in recent months. This month, Ethereum products experienced $785 million in inflows, partly driven by the Cboe BZX Exchange's push to include staking rewards in the 21Shares Core Ethereum ETF. However, Bitcoin's recent decline is a stark reminder of the asset’s vulnerability to macroeconomic shifts and the Fed’s policies, as traders now anticipate only a 2.5% chance of a rate cut during the Fed’s March meeting.
As the year progresses, the future of Bitcoin and Ethereum ETFs remains a critical focus, with Bitcoin’s market movements still closely tied to shifts in interest rate expectations and inflationary pressures.
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