Digital Assets Suffer $1B of Outflows Amid Fed's Hawkish Stance

Digital assets recorded $1 billion in outflows late last week following the Federal Reserve’s hawkish policy stance, but crypto funds managed to stay positive on the week.

Digital asset investment products continued to attract inflows last week, totaling $308 million, despite around $1 billion in outflows, including $576 million in withdrawals in a single day, according to CoinShares data. This marks the 11th consecutive week of positive inflows, bringing the total for the year to $44.7 billion—an increase of 1,886% compared to 2023's $2.25 billion in inflows.

The crypto market’s resilience underscores the institutional interest in cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) as they gain more traction in traditional financial markets.

Inflows and Outflows

BTC investment products recorded $375 million in inflows last week, a substantial decrease from the $2 billion inflows recorded in the prior week. For the year, BTC products have accumulated a total of $38.9 billion in inflows.

ETH marked its eighth consecutive week of inflows with $51.3 million, down from $1 billion the previous week. Last week’s inflows bring ETH’s year-to-date (YTD) accumulation to $4.5 billion.

Other assets like XRP also contributed to the inflows, recording $8.8 million. Solana and multi-asset funds experienced outflows of $8.7 million and $121.4 million, respectively. Solana’s YTD currently stands at $80 million, while multi-assets have accumulated $282 million in inflows.

“Recent price corrections resulted in a $17.7 billion reduction in total assets under management (AuM) for Digital Asset ETPs, likely in response to the hawkish dot plot released by the FOMC on Wednesday,” the report reads. “While these outflows may sound alarming, they comprise just 0.37% of total AuM, ranking as the 13th largest single-day outflow on record.”

The Fed’s Hawkish Moves

The recent market volatility was caused by the Federal Reserve's hawkish stance, marked by a hesitancy for further cuts in 2025, experts said.

The Federal Reserve reduced its benchmark interest rate by 0.25 percentage points to a target range of 4.25%–4.5%, the lowest level since February 2023. However, despite the rate cut, markets responded negatively, with Bitcoin falling from an all-time high of $108,000 on Tuesday to around $92,000 by Friday.

That same day, Federal Reserve Chair Jerome Powell dismissed the idea of the central bank adding Bitcoin to its balance sheet, citing legal constraints under the Federal Reserve Act

“We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change," Powell said at a Wednesday press conference. “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”