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Finance

Bitcoin ETFs Fuel Crypto Surge: Will Fed Rate Cut Ignite a Bull Run?

Crypto funds saw $1.9B inflows. Bitcoin & Ether led, while short-Bitcoin funds declined. AUM hit $40.4B.

byAndres Castro

September 22, 2025, 8:55 AM

Executive Summary

Global cryptocurrency funds attracted $1.9 billion in inflows last week, marking the second consecutive week of substantial gains, largely driven by Bitcoin and Ether exchange-traded products.

Short-Bitcoin ETPs experienced $3.5 billion in outflows, causing their total assets under management to plummet to a multiyear low, indicating a strong bearish sentiment among investors betting against Bitcoin.

The fresh inflows into crypto funds coincided with the U.S. Federal Reserve’s first interest rate cut of the year, which, after an initial cautious reaction, led to resumed inflows and a slight increase in spot crypto prices.

The Story So Far

The recent surge in global cryptocurrency fund inflows, marking several consecutive weeks of gains, is primarily driven by sustained investor interest in digital asset exchange-traded products, particularly Bitcoin ETFs, which have seen extended inflow streaks, further bolstered by the U.S. Federal Reserve’s recent interest rate cut, signaling a positive market response to the policy shift.

Why This Matters

The sustained and significant inflows into cryptocurrency funds, particularly Bitcoin and Ether ETFs, underscore a growing mainstream and institutional confidence in digital assets, pushing total assets under management to new highs and signaling a strong bullish sentiment as investors abandon short-Bitcoin positions. This trend appears to be partly catalyzed by the Federal Reserve’s recent interest rate cut, further linking crypto’s performance to traditional macroeconomic policy shifts despite some lingering investor caution.

Who Thinks What?

Investors in Bitcoin, Ether, Solana, and XRP ETPs demonstrate strong positive sentiment, driving substantial inflows into these long cryptocurrency funds.

Conversely, investors in short-Bitcoin ETPs show a bearish outlook, pulling billions out of these funds and causing their total assets under management to plummet.

The Crypto Fear & Greed Index indicates that overall investor sentiment remains cautious or fearful, despite the significant fund inflows and recent price increases.

Global cryptocurrency funds attracted $1.9 billion in inflows last week, marking the second consecutive week of substantial gains for the sector. Bitcoin exchange-traded funds (ETFs) were a primary driver, extending their inflow streak to four consecutive weeks, while total assets under management (AUM) in crypto exchange-traded products (ETPs) surged to a new year-to-date high of $40.4 billion, according to data from CoinShares and SoSoValue.

Continued Inflow Momentum

The latest weekly inflows follow a robust $3.3 billion recorded the week prior, indicating sustained investor interest in digital asset ETPs. Bitcoin funds maintained their leading position, drawing $977 million in inflows last week and contributing significantly to the four-week total of $3.9 billion for Bitcoin ETFs alone, as reported by SoSoValue.

Ether ETPs also demonstrated strong investor demand, securing $772 million in inflows last week. This pushed Ether’s year-to-date inflows to a record $12.6 billion. Beyond the top two cryptocurrencies, Solana and XRP ETPs also saw notable interest, attracting $127 million and $69 million in inflows, respectively.

Short-Bitcoin Funds Decline

In stark contrast to the broader market’s positive trend, short-Bitcoin ETPs continued their struggle. These funds experienced $3.5 billion in outflows, causing their total AUM to plummet to a multiyear low of $83 million. This suggests a strong bearish sentiment among investors betting against Bitcoin’s price.

Federal Reserve Rate Cut Impact

These fresh inflows into crypto funds coincided with the U.S. Federal Reserve’s decision last Wednesday to cut its key interest rate by 0.25 points, marking its first reduction of the year. James Butterfill, head of research at CoinShares, noted that while investors initially reacted cautiously to what was termed a ‘hawkish cut,’ inflows resumed later in the week, signaling a positive response to the policy shift.

Following the Fed’s rate cut, spot crypto prices exhibited slight volatility. Bitcoin’s price edged up to multi-week highs above $117,000 on Thursday, according to CoinGecko data. Ether also experienced a brief surge, climbing above $4,600 on Thursday after starting the week around $4,500.

Lingering Investor Caution

Despite the strong inflows and rising prices, overall investor sentiment remained cautious last week. The Crypto Fear & Greed Index, which gauges market sentiment, registered a neutral score of 53. The index subsequently dropped to “Fear” with a score of 45 on Monday, suggesting that underlying apprehension persists among market participants even amidst positive market movements.