$1.47 billion in weekly redemptions as Treasury market bets on Fed holding course under Warsh
Crypto exchange-traded products (ETPs), including ETFs, have fallen out of favor with investors as the U.S. Treasury market signals higher-for-longer interest rates under Federal Reserve Chair Kevin Warsh.
Digital asset investment products recorded $1.47 billion in outflows during the week ending May 23, 2026, according to CoinShares. Bitcoin funds alone shed $1.32 billion, with 11 U.S.-listed spot bitcoin ETFs accounting for $1.26 billion of that exodus. Ether funds lost $223 million.
This marks the largest weekly outflow of 2026 for bitcoin ETFs. The redemptions represent the second consecutive week of withdrawals and the third-largest weekly outflow of the year. Over two weeks, cumulative outflows reached $2.54 billion.
“Cumulative outflows over the two weeks now stand at US$2.54bn, suggesting the Iran-related risk-off has deepened and broadened despite continued CLARITY Act progress,” James Butterfill, Head of Research at CoinShares, said in a statement.
The Treasury market is pricing in sustained elevated borrowing costs. The two- to 10-year yield spread widened by 12 basis points last week. The two-year Treasury yield is more sensitive to near-term interest-rate expectations; its faster rise relative to the 10-year yield signals markets expect the Fed to maintain higher rates in the near term. The gap between five- and 30-year yields also widened, reinforcing similar expectations.
Higher interest rates disincentivize riskier asset classes and zero-yielding assets like bitcoin. When borrowing costs rise, investors can earn returns on cash and bonds without taking volatility risk, making speculative holdings less attractive.
Capital appears to be redeploying elsewhere. Investors may be moving money into IPOs, particularly SpaceX, and into commodities rallying amid Strait of Hormuz disruptions, according to market observations in the source material.
The outflows arrive as inflation data looms. Core PCE inflation data is due Thursday, May 29, 2026. Any print above expectations could reinforce market bets on sustained rate elevation.
Stablecoin reserves remain substantial despite the broader crypto outflows. The stablecoin market holds $322 billion in value, larger than the foreign exchange reserves of 95 nations, underscoring the scale of dollar-denominated crypto liquidity.
