Synopsis: Crypto markets slid after a hawkish Fed stance wiped out $360 million in digital asset funds, but Solana’s new ETFs bucked the trend, attracting $421 million inflows amid Bitcoin’s sharp drop.
A hawkish Federal Reserve stance jolted the crypto market last week, wiping out nearly $360 million from digital asset investment products. While investors fled major assets like Bitcoin, Solana’s new ETFs stood tall, drawing strong inflows even as broader sentiment turned cautious.
Powell’s Warning
Federal Reserve Chair Jerome Powell’s remarks during the October 29 post-FOMC press conference unsettled investors. Although the Fed delivered a modest 25-basis-point rate cut bringing rates to 4.50–4.75% Powell’s comment that another cut in December was “not a foregone conclusion” quickly shifted expectations.
His dual warning cutting too fast could reignite inflation, waiting too long could harm growth sounded more hawkish than many expected. Futures markets reacted instantly, slashing the odds of a December rate reduction from about 85% to 65%. This renewed caution hit risky assets hardest, particularly cryptocurrencies.
Bitcoin, often the most policy-sensitive asset, dropped from $112,000 to $106,000 within two days. The move dragged several exchange-traded products lower, erasing much of the previous week’s optimism that followed softer U.S. inflation data.
$360 Million Outflows Reverse Earlier Gains
CoinShares reported that digital asset investment products recorded net outflows of $360 million in the week ending October 31 the biggest retreat in over two months. This marked a sharp turnaround from the $921 million inflows during the prior week when the market had rallied on weaker CPI numbers.
U.S. funds suffered the most, registering $439 million in redemptions. Small inflows from Germany and Switzerland provided only limited relief. Bitcoin ETFs bore the brunt, bleeding $946 million, mainly from U.S. spot products. BlackRock’s IBIT alone saw $403 million in withdrawals, while Fidelity’s FBTC lost $156 million.
Ethereum, however, managed $57.6 million in inflows. Daily figures showed mixed activity, suggesting cautious optimism. On the other hand, XRP saw $8.2 million in fresh subscriptions as traders rotated among altcoins. Multi-asset funds were nearly flat, recording a negligible $0.8 million outflow.
Despite the turbulence, total assets under management across crypto ETPs remained strong at around $198 billion just below record levels. Trading turnover jumped 42% to $28 billion daily, reflecting heightened investor activity and fast portfolio rotations.
Solana ETFs Turn Out
While most digital tokens faced pressure, Solana’s ecosystem delivered a surprise. The network attracted $421 million in inflows, its second-largest weekly haul ever, entirely due to new U.S.-listed ETFs.
The Bitwise Solana Staking ETF (BSOL) debuted on October 28 with $222.8 million in seed capital and added another $194 million within four days. Around the same time, the Grayscale Solana Trust (GSOL) began trading on NYSE Arca, adding $2.2 million. Together, they tilted sentiment in Solana’s favor, propelling its year-to-date inflows to $3.3 billion.
Analysts noted that investors appear to be rotating capital from Bitcoin and Ethereum into Solana’s higher-yield environment. Kronos Research CIO Vincent Liu said that Solana’s 7–8% native staking yield and its scalable DeFi ecosystem make it appealing compared with Bitcoin’s zero yield and Ethereum’s 3.5% returns. Institutional investors were quick to chase this new opportunity.
Watching the Next Policy Move
Bitcoin dominance slipped from 58% to 56% last week as the SOL/BTC pair jumped 12% in just a few days. Although the overall crypto market took a hit, the shift didn’t signal an exit from the sector it was more like a rotation. Money moved from low-yield Bitcoin into yield-generating Solana.
Looking ahead, traders remain wary but alert. The upcoming U.S. election outcome on November 5 and the October jobs report on November 7 could sway Federal Reserve expectations again. One stronger-than-expected payroll print may push Powell to stay hawkish longer.
As of this week, expectations for a December rate cut have recovered slightly to around 70%. The market, however, remains fragile. Bitcoin may have taken the hit, but Solana’s timing shows how innovation and yield can turn a macro headwind into a powerful tailwind.
Written By Fazal Ul Vahab C H