Bitcoin ETFs Face Outflows Amid Inflation, Ethereum Investors Buy the Dip

US Inflation Pushes Bitcoin ETF Outflows, But Ethereum Investors Buy the Dip

Bitcoin ETFs, which have been a significant driver of crypto integration with traditional finance since their introduction in 2024, are currently facing outflows. This trend is largely attributed to the impact of high inflation and the Federal Reserve's monetary policy, which has led to a pullback from institutional investors. However, the Ethereum ETF market has shown resilience, with strong inflows indicating investor confidence and appetite for buying the dip.

Bitcoin ETFs have seen a significant amount of outflows in recent weeks, with $56.76 million in outflows recorded yesterday and a total of $243 million this week. This is a stark contrast to the dramatic recovery the market was experiencing just a month ago. The first week of net outflows in 2025 was recorded last week, and outflows have continued since then.

The broader market dynamics, particularly US inflation and economic policies, have played a significant role in this trend. Jerome Powell, the Federal Reserve Chair, recently rejected President Trump's plan to use rate cuts to reduce inflation. This decision, while having some positive implications for crypto in the long term, has made investors skittish in the short term. US inflation climbed to 3% YoY this morning, causing capital to pull back from Bitcoin and its ETF market.

In contrast, Ethereum ETFs have seen inflows of $12.58 million yesterday, bucking the trend of Bitcoin ETFs. This is largely due to the strong short-term confidence in Ethereum, driven by factors such as the upcoming Pectra upgrade in March and recent purchases from Donald Trump-backed World Liberty Financial. As long as ETH remains below $3,000, the US spot Ethereum ETF market is expected to continue seeing net inflows.