ETF outflows and Fed rate pause expectations push BTC, ETH and XRP lower
Crypto markets lost about $120 billion this week after January’s recovery stalled. U.S. spot Bitcoin ETFs recorded roughly $729 million in outflows on Tuesday and Wednesday, reversing earlier inflows of over $1 billion and coinciding with Bitcoin sliding from ~$94,500 to ~$90,000 (a drop of ~5%, about $4,500). Growing odds of a Federal Reserve rate pause on 29 January (now ~86.7%) — with upcoming jobs and inflation data on 9 and 14 January — weakened risk appetite and weighed on crypto prices. Major altcoins fell harder: XRP dropped ~14% from $2.40 to $2.00, testing the $2 support and the 50-day moving average (a break could target $1.80). Ethereum fell ~6%, from $3,300 to $3,000; a bullish breakout would target $3,600, while a break below $2,900 would signal further downside. The altcoin season index rose from 25 to 57, suggesting short-term rebound potential despite the mid-week pullback. Key drivers: paused institutional demand via ETF flows, Fed rate expectations, and short-term technical levels for BTC, ETH and XRP.
Bearish
The immediate market impact is bearish. Evidence: U.S. spot BTC ETFs posted approximately $729M in outflows mid-week, reversing earlier inflows and coinciding with a ~5% BTC drop and larger losses in altcoins (XRP -14%, ETH -6%). ETF flow reversals reduce institutional demand, removing a key bid under prices. At the same time, rising odds of a Fed rate pause (implying less imminent easing) increase risk-off sentiment for risk assets. Technicals reinforce caution: BTC moved below a recent recovery zone, XRP is testing the $2/50-day MA support (failure risks $1.80), and ETH sits between bullish and bearish breakout levels ($3,600 vs $2,900). Historically, similar ETF outflow episodes and rate-sentiment shifts have driven short-term volatility and downside pressure (e.g., prior weeks when ETF flows flipped or Fed guidance turned hawkish). Short-term traders should expect elevated volatility, potential further downside if ETF outflows persist or macro data disappoints, and fast reversals if inflows resume or positive macro prints arrive. Longer-term impact depends on whether institutional demand resumes; a sustained return of ETF inflows and clearer Fed easing expectations would neutralize the bearish case and support recovery.