Bitcoin investment products experienced a significant setback last week, with outflows totaling $430 million, marking the first major decline of 2025. The sell-off was largely concentrated in spot Bitcoin exchange-traded funds (ETFs) as Federal Reserve Chair Jerome Powell’s cautious stance on rate cuts and a hotter-than-expected inflation report spurred investor concerns. The outflows ended an impressive 19-week inflow streak that had brought in $29 billion since the 2024 U.S. presidential election.
Inflation for January accelerated to 3%, with core inflation rising to 5.5% year-over-year, complicating the Fed’s efforts to bring inflation under control. James Butterfill, Head of Research at CoinShares, highlighted Bitcoin’s sensitivity to shifting rate expectations, noting that the asset was hit hardest by the market reaction. Bitcoin’s price declined 1.4%, settling around $96,900 after fluctuating between $94,900 and $98,600 throughout the week.
Despite Bitcoin’s struggles, alternative digital assets saw positive inflows. Solana led the surge with $8.9 million, followed by XRP at $8.5 million and Sui at $6 million. Optimism surrounding these altcoins has been fueled by growing speculation over potential ETF approvals by the U.S. Securities and Exchange Commission (SEC), with analysts predicting a 75% chance for Solana and 65% for XRP.
Overall, the digital asset market recorded a net outflow of $415 million, the first since the start of the year. However, Bitcoin remains dominant, accounting for 80% of the $6.9 billion in total digital asset investment inflows this year. Ethereum, while overshadowed by Bitcoin, continues to attract interest, with $785 million in inflows this month, partly driven by efforts to include staking rewards in the 21Shares Core Ethereum ETF.
Bitcoin’s recent decline underscores its vulnerability to macroeconomic trends, particularly Fed policies. Market participants now see just a 2.5% chance of a rate cut at the Fed’s March meeting, keeping traders on edge as they navigate an uncertain economic landscape.
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