Bitcoin ETFs shed $1.7B as rate hike fears mount
In brief
- Bitcoin ETF redemptions hit $1.7B this week alone.
- BlackRock IBIT shed $1.3B weekly; FBTC and GBTC also recorded outflows.
- Bitcoin fell to $59,353, lowest since October 2024, amid rate hike expectations.
- Strong May jobs report closed the door on near-term Federal Reserve rate cuts.
Outflows Accelerate Across Major Funds
BlackRock's IBIT led the retreat, shedding $1.3 billion for the week and $3.4 billion since mid-May. Fidelity's FBTC recorded $522 million in net outflows, while Grayscale's GBTC saw $363 million in net losses over the same stretch. The scale of these redemptions signals a broad-based exit from Bitcoin exposure, not isolated profit-taking.
Bitcoin touched $59,353 on Friday, marking its lowest level since October 2024. The decline from above $79,000 in mid-May reflects a sharp repricing of risk across digital assets.
Fed Pivot Reshapes Rate Expectations
The driver behind the selloff is straightforward: economic data shifted the outlook for interest rates. A strong US jobs report sent the dollar surging and closed the door on near-term Federal Reserve rate cuts. May payrolls exceeded every economist's estimate, landing as Kevin Warsh began his tenure as Federal Reserve chair.
The implications ripple through market pricing. Traders are now pricing in at least one rate hike by year-end, with some economists penciling in tightening as early as this year. At the June meeting, policymakers are widely expected to strip out any remaining language signaling future cuts. Inflation has climbed to 3.8% as energy costs rise, giving the Fed little room to ease policy.
Higher rates typically pressure risk assets, including Bitcoin. Investors rotate out of speculative positions when real yields improve. The ETF redemptions reflect that mechanical shift, but they also signal something deeper: uncertainty about whether digital assets can hold their own in a tightening cycle.
