Bitcoin ETFs Slam on the Brakes: Investors Get Jitters After Powell's Hawkish Stance

Whoa, hold onto your hats, crypto fans! Last week, U.S. spot Bitcoin ETFs hit the brakes hard on inflows as investors got spooked by Federal Reserve Chair Jerome Powell's tough talk on rate cuts. It's like the crypto rollercoaster took a sudden dip!

Inflows Plummet, But May's Still a Winner

Get this: according to the data wizards at SoSoValue, Bitcoin ETFs only raked in $603.74 million from May 12-16. That's a whopping 35% drop from the $934 million they pulled in the week before. Ouch!

Now, BlackRock's IBIT was the big winner last week, gobbling up a massive $841.7 million. But other funds? Not so much. Grayscale's BTC and VanEck's HODL scraped together $39.8 million and $7.3 million, respectively. Small potatoes compared to IBIT's haul!

But wait, it gets worse. Fidelity's FBTC bled out $122.2 million, while Grayscale's GBTC and ARK 21Shares' ARKB each lost around $70 million. Even Bitwise's BITB and Invesco's BTCO saw folks cashing out. The rest of the ETFs? Nada, zilch, zero flows.

Despite last week's slowdown, May's still killing it overall. We're talking $2.64 billion flowing into Bitcoin ETFs this month, hot on the heels of April's $2.97 billion. And since their January 2024 launch, these bad boys have brought in over $41 billion in net inflows. Cha-ching!

Ethereum ETFs Bounce Back

But hey, it's not all doom and gloom. Ethereum ETFs had a way better week, pulling in $41.59 million in net inflows. That's a solid comeback after the $38.15 million in outflows the week before. ETH's holding its own!

Powell's Hawkishness Sends Shivers

So, what's got investors spooked? You can thank Powell's recent comments after the April PPI report. Sure, producer prices unexpectedly tanked 0.5%, hinting at cooling inflation. But Powell? He wasn't having it. He made it crystal clear that the Fed ain't rushing to cut rates. Nope, he wants "sustained evidence" that inflation's chilling out before making any moves.

And if that wasn't enough, Powell dropped some more bombshells. He said the economic landscape has shifted, real interest rates are up, and global risks like tariffs and supply shocks are making inflation a wild card. No wonder analysts are pushing back their rate cut predictions to September or later!

Crypto Market Takes a Hit

Of course, crypto's feeling the pain. The total crypto market cap's down 3.3% in the last 24 hours, now chilling at $3.35 trillion. Bitcoin (BTC)? It's hovering around $103,000, down 0.7%. But Ethereum (ETH)? Oof, it took a 4.8% nosedive to under $2,400, a key support level. It's like watching your favorite crypto take a gut punch!

Earlier last week, things were looking up after the U.S. and China agreed to roll back tariffs for 90 days. Everyone was like, "Woohoo, good for global markets!" But that optimism fizzled fast. Treasury Secretary Scott Bessent was quick to warn that the U.S. could slap those tariffs right back on if talks go south. Talk about a buzzkill!

Expert Weighs In

Ruslan Lienkha, the Chief of Markets at YouHodler, spilled the tea to crypto.news. He said last week's pullback was just a natural correction in an ongoing uptrend. But he also warned of potential risks lurking in the shadows.

"The upward momentum in equity markets has cooled off after the tariff talks wrapped up. Short-term traders started cashing in their chips, triggering some corrective moves. This shift in sentiment spilled over into riskier assets, including Bitcoin. So, the current pullback looks like a correction within a bigger medium-term uptrend. But with all this global economic uncertainty and those stubbornly high U.S. interest rates? They could put a damper on how far this trend can go."

Eyes on the Prize: PCE Index

So, what's next? All eyes are on the May 30 release of the PCE index, the Fed's favorite inflation gauge. That data could be the key to whether Powell sticks to his guns or finally pivots. Buckle up, crypto fans, it's gonna be a wild ride!