Bitcoin Faces Significant Outflows Amid Investor Shift Toward Ethereum and Hawkish Federal Reserve Signals

• Digital asset investment products recorded $223 million in net outflows during the week ending August 2, 2025.

• Bitcoin saw the largest losses, with $404 million in outflows, while Ethereum attracted $133.9 million in inflows.

• Investor sentiment shifted due to a hawkish tone from the U.S. Federal Reserve, causing a significant market cap drop.

Digital asset investments faced a significant downturn with $223 million in outflows, as Bitcoin struggles while Ethereum remains resilient. Read more for insights.

What Caused the Recent Outflows in Digital Assets?

The recent outflows in digital assets can be attributed to a hawkish stance from the U.S. Federal Reserve, which indicated that inflation remains elevated. This news prompted investors to sell off their holdings, leading to a total market cap decline of 9.48%, erasing approximately $370 billion.

How Did Bitcoin and Ethereum Perform?

Bitcoin accounted for the bulk of the outflows, with $404 million in net losses, significantly impacting its month-to-date outflow. In contrast, Ethereum recorded its 15th consecutive week of inflows, adding $133.9 million, indicating a shift in investor preference.

Frequently Asked Questions

Why did Bitcoin experience significant outflows?

Bitcoin experienced $404 million in outflows due to investor reactions to a hawkish Federal Reserve report, which raised concerns about inflation.

What is the current sentiment towards Ethereum?

Ethereum remains a favorable investment, attracting $133.9 million in inflows, suggesting a shift in preference from Bitcoin to Ethereum among investors.

Key Takeaways

• Digital assets saw $223 million in outflows, ending a 14-week streak.
• Bitcoin bore the brunt of the losses, while Ethereum continued to attract inflows.
• Investor sentiment shifted due to a hawkish U.S. Federal Reserve tone.

Conclusion

The recent outflows in digital assets highlight a significant shift in investor sentiment, primarily driven by concerns over inflation and a hawkish Federal Reserve. While Bitcoin faces challenges, Ethereum’s continued inflows suggest a potential change in market dynamics.

Source: CoinShares

The week began strong with $883 million in inflows, but investor sentiment shifted quickly as the total crypto market cap fell 9.48%, erasing approximately $370 billion.

The trigger? A hawkish U.S. Federal Reserve tone.

Hawkish U.S. Policy Sparks Investor Sell-off

The sell-off was triggered by U.S. investors reacting to a hawkish Federal Open Market Committee (FOMC) report, which stated that,

“Inflation remains somewhat elevated.”

Following the report, U.S. investors offloaded $383 million worth of digital asset products, pushing the month-to-date outflow to $974 million, just shy of the $1 billion mark.

Investors from Germany, Sweden, and Brazil also contributed to the sell-off, collectively dumping $81 million worth of crypto products.

Source: CoinShares

Bitcoin [BTC] accounted for the bulk of outflows, recording $404 million in net losses, almost halving its month-to-date outflow of $844 million.

Sui [SUI] and Litecoin [LTC] saw relatively minor outflows of just $1 million each.

Ethereum [ETH], on the other hand, remained an outlier. It recorded its 15th consecutive week of inflows, adding $133.9 million, suggesting a shift in investor preference toward Ethereum over Bitcoin.

Meanwhile, investor interest in Solana [SOL], Ripple [XRP], and Cardano [ADA] added another $41 million in cumulative inflows.

BlackRock Defies Trend with Aggressive Accumulation

While most institutional investors exited their Bitcoin and Ethereum exchange-traded fund (ETF) positions, BlackRock took the opposite approach.

The firm’s spot Bitcoin and Ethereum iShares ETFs recorded inflows of $355.3 million and $394.2 million, respectively, suggesting that BlackRock views both assets as trading at a discount.

However, the wider institutional sentiment didn’t mirror this move. The week began with a significant sell-off.

Source: CoinGlass

According to CoinGlass, $323.5 million worth of Bitcoin spot ETFs were sold in the past day alone. The Ethereum spot ETF segment saw an even steeper withdrawal—its single-largest one-day outflow yet.

Continued selling pressure like this signals a broad divestment trend that could weigh on the prices of both Bitcoin and Ethereum.

Still, the market’s longer-term outlook remains intact.

The total assets under management (AUM) for digital asset products remain steady at $215 billion, suggesting that this could be a temporary pullback rather than a long-term reversal.