Institutional investors exit crypto ETFs amid Fed’s hawkish stance and U.S. government shutdown, though analysts insist the long-term bullish structure remains.1
The U.S. spot Bitcoin and Ethereum ETFs witnessed a combined net outflow of $797 million on Tuesday, marking one of the steepest single-day exits in recent months. The move comes as investors react to renewed macroeconomic pressure, including the Federal Reserve’s hawkish outlook and the ongoing U.S. government shutdown, which have fueled widespread fear across financial markets.
Institutional Outflows Reflect Market Anxiety
According to SoSoValue data, Bitcoin ETFs saw a $577.7 million outflow, the largest since August 1. Fidelity’s FBTC led the decline with $356.6 million in redemptions, followed by Ark & 21Shares’ ARKB at $128 million and Grayscale’s GBTC with $48.9 million in outflows.
This marks the fifth consecutive day of withdrawals, totaling $1.9 billion in Bitcoin ETF outflows. Meanwhile, Ethereum ETFs reported $219.3 million in redemptions, led by BlackRock’s ETHA, which saw $111 million withdrawn.
“The fifth straight day of outflows marks a decisive shift in institutional positioning,” said Rachael Lucas, crypto analyst at BTC Markets. “This isn’t just a pause; it’s a recalibration.”
Macro Pressures Fuel ‘Extreme Fear’
Analysts attribute the sell-off to growing macroeconomic headwinds. The U.S. dollar index (DXY) climbed above 100 after Fed Chair Jerome Powell dismissed expectations for a December rate cut. This strengthened the dollar and weighed on risk assets, including cryptocurrencies.
“Risk assets are repricing, and crypto, still tightly correlated to tech, is feeling the heat,” Lucas explained.
THE BLOCK
The Crypto Fear and Greed Index dropped from 42 to 21, signaling a state of “extreme fear”. Derek Lim, research lead at Caladan, said Powell’s stance and the government shutdown have amplified risk-off sentiment.
Analysts Still See Bullish Potential
Despite the turbulence, Lim emphasized that crypto’s long-term bullish structure remains intact.
“A delayed rate cut is short-term negative, but the overall macro setup hasn’t changed significantly,” he said. “We’re still approaching the end of quantitative tightening, and eventual rate cuts are inevitable.”
“If outflows persist, expect more price pressure and volatility,” Lucas warned. “But a shift in macro tone — like rate cuts, a weaker dollar, or renewed real-world asset tokenization — could reignite institutional demand.”
While fear dominates the short-term outlook, many analysts believe the current correction could pave the way for long-term reaccumulation as macroeconomic conditions evolve.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.
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