Bitcoin ETFs extend outflows as Fed caution, geopolitical risks weigh on crypto

The US Bitcoin exchange-traded fund (ETF) market remained under pressure through January 28, recording a second consecutive day of net outflows and underscoring persistent caution among institutional investors despite a sharp slowdown in the pace of redemptions.

According to the data from Farside Investors, Bitcoin ETFs logged net outflows of around $19.6 million on January 28.

While the figure was modest compared with the heavy selling seen earlier in the month, it extended a weak stretch in which the funds have posted only one positive inflow day over the past eight trading sessions, and that lone gain amounted to just about $7 million.

The recent softness marks a clear reversal from the strong enthusiasm seen in mid-January.

Inflows on January 14, when Bitcoin ETFs attracted a combined $840.6 million in fresh capital.

Sentiment then deteriorated rapidly, culminating in the largest single-day outflow of the period on January 21, when $708.7 million exited the products.

Ethereum ETFs show signs of stabilisation

In contrast to Bitcoin, the US Ethereum ETF market showed tentative signs of stabilisation.

On January 28, Ethereum ETFs recorded net inflows of $28.1 million.

The rebound followed an earlier show of strength on January 26, when Ethereum ETFs attracted approximately $117 million in inflows.

The renewed interest provided some relief after a volatile period marked by sharp reversals in the second half of the month.

Ethereum funds had also enjoyed strong inflows in mid-January, peaking on January 14 with $175.1 million of net additions.

That momentum reversed abruptly alongside broader crypto market weakness, with the largest daily outflow recorded on January 21, when $287 million left Ethereum ETFs.

The bulk of that selling was driven by a $250.3 million outflow from BlackRock’s iShares Ethereum Trust (ETHA).

The January 28 data suggested a shift in tone. ETHA returned to net inflows with $27.3 million added, while persistent outflows from Grayscale’s ETHE and Ethereum Mini Trust products came to a halt.

While the recovery remains modest, it indicates that selling pressure in Ethereum-linked funds may be easing relative to Bitcoin.

Bitcoin Price Pressured by Fed and Geopolitics

Bitcoin prices remained under pressure, with the cryptocurrency trading below $88,000 on Thursday.

The decline followed a rejection at a key technical level earlier in the week and came in the wake of the Federal Reserve’s policy decision on Wednesday.

The Fed left its benchmark interest rate unchanged in a target range of 3.50% to 3.75%, a move that had been widely anticipated by markets.

However, the lack of a clearly dovish signal from the central bank capped upside for risk assets.

Federal Reserve Chair Jerome Powell said inflation remains well above the 2% target, reinforcing expectations that policymakers will move cautiously.

Two Fed governors, Stephen Miran and Christopher Waller, dissented in favour of a 25 basis-point rate cut, but the broader message from the meeting was one of patience.

Traders now largely expect the Fed to maintain its current stance through the end of the quarter and potentially until Powell’s term as chair concludes in May, even as markets continue to price in two rate cuts in 2026.

Beyond monetary policy, concerns over the Federal Reserve’s independence have added another layer of uncertainty.

A Department of Justice criminal investigation involving Powell and an evolving effort to remove Fed Governor Lisa Cook have drawn attention to potential political interference in monetary policymaking, dampening risk appetite further.

Geopolitical developments have also weighed on sentiment. Reuters reported that US President Donald Trump is considering options against Iran, including targeted strikes on security forces and leadership figures, as protests continue in the country.

“The arrival of a US aircraft carrier and supporting warships in the Middle East this week has expanded Trump’s capabilities to potentially take military action, after he repeatedly threatened intervention over Iran’s crackdown,” the report said.

The escalation in geopolitical risk has driven investors toward traditional safe-haven assets. Gold and silver prices pushed to new all-time highs, while risk-sensitive assets such as cryptocurrencies struggled to attract sustained buying interest.

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