Rising Treasury yields are crushing rate-cut hopes, and institutional investors are pulling billions from spot Bitcoin funds in response.
US spot Bitcoin ETFs hemorrhaged roughly $1.4 billion in net outflows during the week ending May 25, making it the most painful stretch for the funds in months.
The culprit isn’t some crypto-native scandal or protocol exploit. It’s the bond market. Treasury yields have surged to levels not seen since early 2025, effectively killing hopes that the Federal Reserve would cut interest rates anytime soon.
The numbers tell a brutal story
Since May 7, cumulative outflows from Bitcoin ETFs have ballooned to approximately $2.7 billion. That’s a sharp reversal from the inflow momentum these products enjoyed earlier in the month.
On a single day during the stretch, Bitcoin ETFs recorded redemptions of $648.6 million.
Bitcoin’s price reflected the pressure, hovering near $76,770 and hitting three-week lows. Ethereum ETFs weren’t spared either, posting $223 million in outflows for the same week.
The one outlier worth noting: XRP ETFs pulled in $42 million in net inflows during the exact same period.
Why Treasuries are calling the shots
The 10-year Treasury yield climbed to 4.6653%, its highest level since January 2025. The 30-year hit 5.14%.
CoinShares and SoSoValue, two firms tracking digital asset fund flows, both noted that the outflows are driven by macroeconomic forces rather than anything crypto-specific. BlackRock’s Bitcoin ETF holdings have been notably affected, which is significant because BlackRock’s IBIT has historically been the bellwether for institutional sentiment toward spot Bitcoin exposure.
What this means for investors
The $2.7 billion in cumulative outflows since May 7 suggests something more than a one-week blip. The XRP inflows are an interesting wrinkle — $42 million is modest compared to what Bitcoin is losing, but some investors appear to be rotating within crypto rather than exiting entirely.
For anyone holding or considering Bitcoin ETF positions, the variable to watch isn’t Bitcoin’s on-chain activity or mining difficulty. It’s the 10-year Treasury yield. If it continues climbing past 4.7% or approaches 5%, expect further ETF outflows.
