Bitcoin, Ethereum and Crypto ETFs Struggle as Fed Jitters Grow

Bitcoin entered the week strong, hitting a record $124,500 before retreating sharply. The surge followed positive U.S. inflation data, but sentiment quickly changed when producer prices rose faster than expected. Traders scaled back bets on Federal Reserve rate cuts, sending Bitcoin down toward $117,000. Polymarket data shows expectations for a September cut slipped from 80% to 70%. Historically, Bitcoin benefits when the Fed lowers rates, so the cooling optimism has weighed on prices. Technical charts also show a bearish double-top pattern, suggesting that Bitcoin could face more near-term pressure before attempting a rebound.

Ethereum ETFs Highlight Market Fragility

Ethereum also faced turbulence after climbing close to its all-time high of $4,891. Spot Ethereum ETFs in the U.S. recorded $59 million in net outflows on August 15, breaking an eight-day inflow streak worth $3.7 billion. Grayscale’s ETHE led with $101 million in outflows, while Fidelity’s FETH lost $272 million. Only BlackRock’s ETHA posted gains, with $338 million in inflows. The flows highlight how institutional investors are quick to take profits as Ethereum retreats. Still, with cumulative inflows surpassing $12 billion, Ethereum ETFs remain a magnet for long-term capital.

Crypto Market Sees Broad Altcoin Declines

The correction extended beyond Bitcoin and Ethereum, hitting altcoins across the board. Ethereum dropped over 5% in a single day, sliding below $4,500 after nearly touching $4,800. Other major altcoins like Solana, Avalanche, and Chainlink also lost between 3% and 7%. The total crypto market cap shed $80 billion overnight, now standing near $4 trillion. Market dominance shifted back toward Bitcoin, which holds almost 58% share. The sell-off shows how sensitive altcoins remain to macroeconomic news and Fed expectations. In contrast, MNT stood out with a 10% gain, proving that selective momentum still exists in a red market.

Crypto ETFs Mirror Investor Sentiment

ETF flows reveal how closely institutional behavior follows crypto price action. When Ethereum surged, inflows poured into ETFs, led by BlackRock and Fidelity. As soon as prices retreated, outflows accelerated, showing investors were keen to lock in profits. This pattern underlines the increasing role of ETFs in shaping short-term market moves. Grayscale remains a key player, but the competition from newer funds like BlackRock’s ETHA has shifted the landscape. For Bitcoin, analysts expect similar behavior once a spot ETF approval cycle expands further. ETFs now serve as a bridge between traditional finance and crypto, but they also amplify volatility.

What’s Next for Bitcoin, Ethereum, and Altcoins

The crypto market sits at a crossroads. Bitcoin’s trajectory depends heavily on the Fed and inflation signals. If rate cut odds rise again, Bitcoin could quickly reclaim new highs. Ethereum’s momentum may hinge on whether ETF inflows return, as institutional demand has proven to be a powerful driver. Altcoins, meanwhile, will remain volatile and closely tied to macro events. Investors should watch for signs of stagflation, tariff impacts, and any new Fed guidance. The coming weeks will determine if this correction is a pause before another rally or the start of a deeper pullback.