On Sept. 18, investors pulled a net $51.28 million from spot bitcoin exchange-traded funds, marking the first daily outflow in more than one week after the Federal Reserve projected fewer rate reductions over the coming quarters. The withdrawal broke a seven-day streak of inflows that had accumulated almost $3 billion, though total assets under management across major bitcoin ETFs remain above $150 billion, according to SoSoValue analytics.
The outflow coincided with the Fed’s decision to cut the federal funds rate by 25 basis points to a target range of 4.00%–4.25%, its first reduction since late 2024. Despite delivering the expected cut, Fed Chair Jerome Powell expressed caution about rapid successive easing, warning of elevated inflation and potential downside risks to employment. Market participants interpreted this mixed signal as a hawkish tilt, prompting risk-off sentiment in crypto and other asset classes.
Ethereum ETFs also experienced redemptions for the second consecutive day, losing $1.89 million in net withdrawals. Ether prices, by contrast, edged higher by 1.7% over the 24-hour period, reflecting differentiated market dynamics for token projects compared to bitcoin products. The broader CoinDesk 20 index registered a 2% increase, led by alternative tokens that have rallied on dovish rate cut expectations.
Analysts note that the Fed’s updated dot plot projections, indicating only two additional cuts in 2025 and fewer in 2026 than markets had anticipated, introduced uncertainty about the future trajectory of U.S. monetary policy. This uncertainty weighed on risk assets, including crypto, as traders recalibrated positions ahead of upcoming economic data releases. The interplay between central bank communications and investor positioning remains a critical driver of crypto ETP flows.
Longer-term perspectives suggest that prolonged periods of tight liquidity and cautious rate expectancies could suppress inflows into leveraged and speculative structures. However, some strategists highlight that bitcoin’s scarcity and digital reserve narrative may attract renewed capital inflows when clarity returns to the macro outlook. For now, the market awaits further signals from economic indicators and Fed commentary to confirm whether the recent correction represents a temporary retracement or the start of a deeper pullback.
Overall, Sept. 18’s outflow event underscores the sensitivity of crypto ETF flows to central bank communications. While the first rate cut of the cycle provided a short-term boost to speculative assets, cautionary guidance can swiftly reverse that momentum. ETF issuers and institutional investors are monitoring Fed developments closely to navigate the evolving landscape for digital asset investment products.
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