Bitcoin Faces First Major Outflows of 2025 Amid Inflation and Fed Concerns

Bitcoin Suffers $430 Million Outflows, But Altcoins Show Resilience
Bitcoin ETFs Take a Hit, But Solana and XRP ETF Speculation Gains Traction
Bitcoin’s Price Dips as Market Reacts to Fed’s Caution and Inflation Surge

Bitcoin investment products experienced a significant setback last week, with a total outflow of $430 million, marking the first major decline of 2025. The outflows were primarily concentrated in Bitcoin products, especially spot ETFs, triggered by concerns following Federal Reserve Chair Jerome Powell’s cautious stance on rate cuts and a higher-than-expected inflation report. This marks the end of a 19-week streak of inflows, a period that began after the 2024 U.S. presidential election, during which Bitcoin products saw $29 billion in inflows.

The recent inflation report for January revealed a 3% inflation rate, with core inflation spiking to 5.5% year-over-year, adding pressure on the Fed’s efforts to combat inflation. James Butterfill, Head of Research at CoinShares, explained that Bitcoin is particularly sensitive to rate cut expectations, which contributed to the heavy outflows last week.

Despite the decline in Bitcoin-related products, alternative digital assets showed some resilience. Assets such as Solana, XRP, and Sui saw significant inflows, totaling $8.9 million for Solana, $8.5 million for XRP, and $6 million for Sui. This surge is largely driven by optimism surrounding the potential approval of ETFs for these assets by the U.S. Securities and Exchange Commission (SEC), with analysts predicting a 75% chance of approval for Solana and 65% for XRP.

Overall, the broader digital asset market saw a net outflow of $415 million, marking the first outflow of the year. Bitcoin’s price dipped by 1.4%, closing around $96,900 after fluctuating between $94,900 and $98,600. However, despite the recent outflows, Bitcoin investment products continue to dominate crypto investment flows, accounting for 80% of the $6.9 billion in total inflows to digital asset investment products in 2025.

Ethereum, while overshadowed by Bitcoin, also attracted significant attention. Ethereum products experienced $785 million in inflows this month, partly fueled by Cboe BZX Exchange’s push to include staking rewards in the 21Shares Core Ethereum ETF. Still, Bitcoin’s recent decline serves as a reminder of its vulnerability to macroeconomic shifts and the Fed’s policies, with traders now anticipating only a 2.5% chance of a rate cut in the Fed’s March meeting.

As the year unfolds, the future of Bitcoin and Ethereum ETFs remains a key focus, with Bitcoin’s market movements continuing to be influenced by interest rate expectations and inflationary pressures.

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