It’s getting tough for cryptocurrency bulls.
Crypto exchange-traded products (ETPs), including ETFs, have fallen out of favor with investors as the US Treasury market signals higher interest rates for longer.
Digital asset investment products saw outflows of $1.47 billion 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 outflow of the year. The 11 US-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 ether (ETH) funds.
Other altcoin ETFs also saw a material moderation in flows.
“Cumulative outflows over the two weeks now stand at $2.54 billion, suggesting that Iran-related risk aversion has deepened and widened 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 increased their bets that the Federal Reserve will keep interest rates higher under new Chairman Kevin Warsh.
Their positioning is evident in the section of the Treasury bond market curve, identified by the difference between two- and 10-year yields, which grew 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 more rapid rise in the two-year yield, implies expectations of elevated borrowing costs in the near term. Similarly, the gap between five- and 30-year yields also widened, showing similar expectations.
High interest rates often discourage riskier asset classes, especially weighing on emerging technologies like cryptocurrencies and zero-yield assets like bitcoin.
Taken together, capital outflows and yield curve signals paint a bearish picture for risk assets. Investors may be redeploying capital into impending IPOs, especially SpaceX, which could be the largest in history, and commodities, which are rallying amid disruptions to oil flows through the Strait of Hormuz.
Upcoming releases of US inflation data, including the Federal Reserve’s preferred gauge, the Core PCE, due on Thursday, could clarify the market’s path. Stay alert!
Read more: For an analysis of current activity in altcoins and derivatives, see Crypto Markets Today. For a complete list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is trend?
Today’s sign
The chart shows daily swings in the relationship between the US dollar prices of bitcoin and gold.
The ratio has been rising since March, indicating outperformance of BTC relative to gold and, at the time of writing, it remains at bullish trend line support. A rebound from here would imply a continuation of the rally.
Conversely, if the support breaks, it indicates a resumption of the broader BTC bear market.
