Bitcoin and Ethereum ETFs Lose Most of Their 2026 Gains as Expectations for Rate Cuts Diminish

Bitcoin and Ethereum ETFs Lose Early-Year Gains

Exchange-traded funds focused on Bitcoin and Ethereum have seen most of their year-to-date inflows wiped out.

Data from CoinShares, a digital asset management firm, reveals that during a recent four-day downturn, these funds shed $1.3 billion of the $1.5 billion they had attracted since January began. Over the past week alone, crypto exchange-traded products experienced $454 million in outflows.

Bitcoin Faces Significant Withdrawals

James Butterfill, CoinShares’ head of research, noted that Bitcoin was hit hardest, with $405 million withdrawn last week. Interestingly, short-Bitcoin funds also saw $9.2 million in outflows, suggesting uncertainty in overall market sentiment toward the cryptocurrency.

According to CoinGecko, Bitcoin was recently trading at $91,722, reflecting a 1% increase over the previous 24 hours.

Changing Expectations for Fed Rate Cuts

Butterfill attributed the shift in investor mood to diminishing expectations for a Federal Reserve rate cut in March. The Federal Open Markets Committee is scheduled to review interest rates on January 27-28. Futures markets currently suggest a 95% probability that rates will remain unchanged at that meeting.

Just a week earlier, futures data indicated a 44% likelihood of a rate cut in March, but that figure has since dropped to 26.2%. Now, futures trading points to a 72.7% chance that rates will stay the same in March as well.

Prediction Markets Remain Hopeful

On Myriad, a prediction platform owned by Decrypt’s parent company Dastan, users still see a reasonable chance of a rate cut, though not immediately. The consensus is that there’s a 59% probability the FOMC will reduce rates by 25 basis points before July.

Altcoins Attract New Investments

While Bitcoin and Ethereum funds experienced withdrawals, altcoin investment products saw inflows. Butterfill reported that XRP, Solana, and Sui attracted $45.8 million, $32.8 million, and $7.6 million in new investments, respectively.

At the time of reporting, XRP and Sui were each down just under 1% over the past day, trading at $2.07 and $1.80. In contrast, Solana had risen 2.2% since Sunday, reaching approximately $142.