Hawkish Fed remarks drive $360M in crypto outflows but Solana ETFs shine

Cryptocurrency investment products saw $360 million in outflows last week as investors reacted to Federal Reserve Chair Jerome Powell’s cautious remarks on future rate cuts.

Despite Wednesday’s rate cut, Powell’s remark that another one in December was “not a foregone conclusion,” combined with the absence of economic data due to the ongoing government shutdown, appears to have left markets uncertain, CoinShares reported on Monday.

Most of the selling pressure came from the US markets, which saw $439 million in outflows, partly offset by modest inflows from Germany and Switzerland. Bitcoin ETFs led the decline with $946 million in redemptions.

Even as Bitcoin funds bore the brunt of outflows, not all assets followed suit. Solana stood out, attracting $421 million in inflows, its second-largest on record, driven by demand for newly launched US exchange-traded funds (ETFs), lifting year-to-date totals to $3.3 billion.

Ethereum also saw $57.6 million in inflows, although daily activity suggested a mixed sentiment among investors.

The outflows come after crypto products amassed $921 million in inflows the previous week, driven by lower-than-expected Consumer Price Index (CPI) data released on Oct. 24.

Related: Retail investors ‘retreat’ to $98.5K: 5 things to know in Bitcoin this week

New Solana staking ETF

Bitwise’s new Solana Staking ETF (BSOL) debuted last Tuesday at $222.8 million in seed assets, signaling strong institutional demand for Solana staking products.

BSOL offers investors direct exposure to Solana (SOL) with an estimated 7% annual yield from onchain staking rewards.

By Friday, spot Solana ETFs had logged a fourth straight day of inflows, adding $44.48 million. 

Vincent Liu, chief investment officer at Kronos Research, told Cointelegraph the trend reflects growing interest in staking yields and ongoing “capital rotation,” as traders take profits from recent Bitcoin (BTC) and Ether (ETH) rallies.

Although Solana ETF inflows have surged, at the time of writing, SOL was trading around $166, down over 9% during the past 24 hours and around 26% over the past 30 days, according to CoinGecko data.

Magazine: Solana vs Ethereum ETFs, Facebook’s influence on Bitwise: Hunter Horsley