- Bitcoin and Ethereum ETFs saw massive outflows on February 12, driven by stronger-than-expected U.S. inflation data that dampened investor confidence and raised concerns about delayed Federal Reserve rate cuts.
- Despite the downturn, experts suggest a potential rate cut later this year could trigger a major crypto rally, possibly pushing Bitcoin past $110,000.
The U.S. Bitcoin spot exchange-traded funds (ETFs) witnessed a dramatic increase in outflows on February 12, signaling heightened investor concerns over potential Federal Reserve policy changes. The total outflows from these ETFs soared to $251.03 million, marking a staggering 342% surge from the previous day’s $56.76 million, according to SoSoValue data.
Fidelity’s FBTC Leads the Pack in Withdrawals
For the third consecutive day, Fidelity’s FBTC bore the brunt of the withdrawals, with investors pulling out a massive $101.97 million. Following closely behind was ARK and 21Shares’ ARKB, which recorded $97.03 million in outflows. Other notable 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
- Valkyrie’s BRRR: $3.71 million
Despite the overwhelming sell-off, Grayscale’s mini Bitcoin Trust was a rare exception, recording inflows of $16.34 million, while three other Bitcoin ETFs remained unchanged in net movement. The trading volume for Bitcoin ETFs hit $2.53 billion, with cumulative net inflows standing at $40.21 billion.
Ether ETFs Follow Suit
The bearish sentiment wasn’t limited to Bitcoin ETFs. Nine Ether ETFs also switched to net outflows, collectively losing $40.95 million after having recorded inflows of $12.58 million the previous day. The outflows were concentrated in:
- Grayscale’s ETHE: $30.23 million
- Fidelity’s FETH: $10.72 million
Daily trading volume for Ether ETFs stood at $349.41 million, with total net inflows since launch at $3.13 billion.
Inflation Data Triggers Market Sell-Off
The primary catalyst behind this mass exodus appears to be the release of stronger-than-expected U.S. inflation data. January’s inflation rate hit 3.3% year-over-year, exceeding the anticipated 3.1%. This hotter-than-expected data has led to a shift in trader expectations regarding interest rate cuts.
Previously, markets anticipated multiple rate cuts in 2025, but now, with inflation proving more persistent, only one rate cut is expected, with the possibility of no cuts until 2026. This scenario has dampened investor enthusiasm for digital assets, which typically perform well in lower interest-rate environments.
Could a Rate Cut Spark a Crypto Rally?
Despite the current market downturn, some experts believe that a potential rate cut later this year could reverse the trend. David Hernandez, a crypto investment specialist at 21Shares, emphasized that such a move could inject a significant amount of liquidity into the market, driving both equities and crypto prices higher.
“If the Fed does eventually cut rates, we could see Bitcoin break through $110,000 and solidify its position in six-digit territory,” Hernandez stated.
Final Thoughts
While the surge in Bitcoin and Ethereum ETF outflows reflects short-term market jitters, the long-term outlook remains uncertain. If inflation cools and the Fed shifts its stance, digital assets could see renewed investor confidence, potentially sparking a bullish rally. For now, all eyes remain on the Federal Reserve and its next moves.
