Bitcoin ETFs End Massive Inflow Streak Amid Fed Policy Concerns

In brief

• Bitcoin exchange-traded funds (ETFs) experienced $342.2 million in outflows Tuesday, concluding a 15-day inflow streak worth over $4.7 billion.
• Fidelity’s FBTC led selling with $172.7 million, while Fed Chair Powell attributed potential rate cuts’ delay partly to President Trump’s trade tariffs.
• Analysts suggest institutional interest in Bitcoin remains strong despite the temporary pause in inflows.

Key Developments

Federal Reserve Chair Jerome Powell cited lingering concerns over President Donald Trump’s tariffs as a key factor in the Fed’s decision to maintain its restrictive monetary policy stance. Speaking at a European Central Bank forum, Powell effectively stated rate cuts this year would not have occurred without the tariff policies, a comment occurring alongside his usual rebuff of calls for aggressive action from the White House.

“We essentially put the pause button on basically from the start of the year,” Powell stated, explaining the Fed’s position amidst concerns that “all inflation forecasts… went up materially as a consequence of the tariffs.”

Speaking Friday to a joint press corps alongside President Trump, Powell reiterated that the “stubborn mule,” as he called himself in recent weeks, indicated he is “not going to be rushed here,” specifying that “softer policy comes after our data-readings,” particularly inflation data.

Institutional Perspective

The sudden reversal of nearly $5 billion in cumulative inflows over 15 days saw clear pressure on major Bitcoin products. Farside Investors data showed Fidelity’s FBTC REIT withdrawal taking the brunt of the selling at $172.7 million, followed by a significant $119.5 million outflow from Grayscale’s GBTC.

While other large funds Bitwise’s BITB ($23 million), ARK 21Shares’ ARKB ($27 million) and BlackRock’s IBIT experienced substantial but not as severe outflows, the broader trend disrupted the euphoria of the previous 15-day inflow period.

Market Reactions

The sell-off coincided with a pause of Bitcoin trading, a nearly 1.3% dip from its trading range. However, Bitcoin subsequently recovered much of that loss, ending the day at $107,822, suggesting immediate investor reactions might be cyclical, rather than fundamentally reversing demand.

Analysts portrayed Tuesday’s activity as a temporary pause and not a full withdrawal of institutional interest from crypto assets, potentially reflecting a “trade” against an anticipated Fed easing amidst ongoing macroeconomic uncertainty.

“Just a Rest Stop”

Market experts cautioned against drawing definitive conclusions from fluctuating daily flows. Traders noted that prolonged selling often occurs when a market experiences significant interest inflows.

“[Tuesday] was just a pause to figure out where to go,” explained Shawn Young, chief analyst at MEXC Exchange, adding that after such a sharp inflow period, some institutional investors have likely “taken a step back” to reassess.

“Higher rates for longer are generally disliked at the macro level,” Young further commented, suggesting the current selling reflects temporary reactions to ongoing policy and geopolitical uncertainty.