This is getting tough for crypto bulls.
Crypto exchange-traded products (ETPs), including ETFs, have fallen out of favor with investors as the U.S. Treasury market reports higher long-term interest rates.
Digital asset investment products saw $1.47 billion in outflows last week, the second consecutive week of redemptions and the third-largest weekly outflow of 2026, according to CoinShares.
Bitcoin funds led the charge, losing $1.32 billion in their biggest weekly outing of the year. The 11 U.S.-listed spot Bitcoin ETFs alone saw an outflow of $1.26 billion last week, following the previous week’s $1 billion exodus. Investors withdrew $223 million from Ethereum (ETH) funds.
Other altcoin ETFs have also seen significant moderation in flows.
“Cumulative outflows over the two weeks now stand at $2.54 billion, suggesting that Iran-related risk aversion has deepened and broadened despite continued progress on the CLARITY Act,” James Butterfill, head of research at CoinShares, said in a report shared with CoinDesk.
The outflows came as bond market traders stepped up bets that the Federal Reserve would keep interest rates higher under new Chairman Kevin Warsh.
Their positioning is evident from the curve section of the Treasury market, identified by the difference between the two- and 10-year yields, which rose more than 12 basis points last week.
The two-year yield is more sensitive to interest rate expectations, so the widening spread, driven by a faster rise in the two-year yield, implies expectations of high borrowing costs in the near term. Likewise, the gap between five- and thirty-year yields has also widened, giving rise to similar expectations.
High interest rates often discourage riskier asset classes, particularly weighing on emerging technologies like cryptocurrencies and zero-yielding assets like bitcoin.
Taken together, capital outflows and yield curve signals paint a bearish picture for risky assets. Investors could redeploy capital into looming IPOs, particularly SpaceX, which could be the largest ever, and into commodities, which are recovering amid disruptions to oil flows through the Strait of Hormuz.
Upcoming U.S. inflation data releases, including the Fed’s preferred gauge, core PCE, due Thursday, could clarify the market’s trajectory. Stay vigilant!
Read more: For analysis of current altcoin and derivatives activity, see Crypto Markets Today. For a full list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is the trend
Signal of the day
The chart shows daily fluctuations in the ratio between the US dollar prices of bitcoin and gold.
The ratio has increased since March, indicating BTC’s outperformance against gold, and at the time of writing, it retains uptrend line support. A rebound from there would mean the rally continues.
Conversely, if support breaks, it signals a resumption of the broader BTC bear market.
