Key Points
- US spot Bitcoin ETFs saw a significant increase in outflows on Feb. 12 due to expectations of a more hawkish Federal Reserve stance.
- Bitcoin and Ethereum ETF outflows coincided with a decline in Bitcoin and Ethereum prices following stronger-than-expected U.S. inflation data.
Bitcoin ETFs Experience Major Outflows
US spot Bitcoin exchange-traded funds experienced a sharp rise in outflows on February 12. This was in response to the anticipation of a more hawkish Federal Reserve position on interest rate cuts.
According to data from SoSoValue, the 12 spot Bitcoin ETFs recorded $251.03 million in outflows. This was a 342% increase from the $56.76 million seen the previous day.
Fidelity’s FBTC led the outflows for the third day in a row with $101.97 million exiting the fund. It was closely followed by ARK and 21Shares’ ARKB with $97.03 million. Other funds that experienced outflows included Bitwise’s BITB ($25.94 million), BlackRock’s IBIT ($22.11 million), Invesco Galaxy’s BTCO ($9.69 million), Grayscale’s GBTC ($6.92 million), and Valkyrie’s BRRR ($3.71 million).
Ethereum ETFs Also Switch to Net Outflows
Bitcoin ETFs were not the only ones to experience outflows. Nine Ethereum ETFs also turned negative.
Ethereum ETFs recorded $40.95 million in redemptions, a reversal from the previous day’s $12.58 million in inflows. These losses came entirely from Grayscale’s ETHE and Fidelity’s FETH funds, which saw $30.23 million and $10.72 million in outflows respectively.
The outflows from Bitcoin and Ethereum ETFs coincided with a drop in Bitcoin and Ethereum prices. This was following stronger-than-expected U.S. inflation data. January’s inflation came in at 3.3% year-over-year, exceeding the 3.1% forecast.
With inflation running hotter than expected, traders now anticipate only one rate cut in 2025. They expect the Fed to likely hold steady until 2026. As a result, the crypto market suffered, as digital assets generally perform better in lower interest-rate environments.
David Hernandez, a crypto investment specialist at 21Shares, noted that this reaction could set the stage for a major rally if the Fed cuts rates later this year. He added that Bitcoin, in particular, could benefit significantly, potentially surging to new all-time highs.