Bitcoin ETFs Face Record Outflows as Trump’s Tariffs Stoke Stagflation Fears
The U.S. financial landscape is witnessing significant shifts as Bitcoin exchange-traded funds (ETFs) experience historic outflows and renewed trade tensions threaten economic stability.
Investor sentiment is increasingly cautious, with concerns over stagflation and market volatility dominating discussions.
Bitcoin ETFs Bleed $5.5 Billion in Longest Outflow Streak
Over the past five weeks, U.S. spot Bitcoin ETFs have faced a relentless wave of withdrawals, totaling more than $5.5 billion. This marks the longest consecutive period of net outflows since the launch of these investment products. With only one day of inflows recorded in March, the trend suggests a broader shift in risk appetite among institutional investors.
Analysts point to multiple factors contributing to this downturn, including regulatory uncertainty, a cooling crypto market, and broader macroeconomic pressures. Bitcoin’s price has also struggled to gain upward momentum, further discouraging inflows into ETFs.
Trump’s Tariffs Raise Economic Alarm Bells
Adding to investor unease, former President Donald Trump has announced sweeping new tariffs, including a 25% duty on Canadian and Mexican imports and a 10% tariff on Chinese goods. The move, aimed at addressing illegal immigration and trade imbalances, has sparked fears of economic stagnation and supply chain disruptions.
Economic experts warn that these tariffs could have severe consequences, potentially slowing U.S. economic growth while fueling inflation. The Organization for Economic Co-operation and Development (OECD) has already highlighted the risk of a trade war impacting North American markets. Meanwhile, polls indicate that a majority of Americans believe the economy will take years to recover from these protectionist policies.
Stagflation Trade Gains Momentum
As uncertainty grips financial markets, investors are rotating away from traditional assets like the S&P 500 and Bitcoin, instead favoring defensive plays. Goldman Sachs’ “stagflation basket,” which includes commodities and recession-proof stocks, has surged nearly 20% year-to-date. This shift underscores concerns that the economy may be entering a period of weak growth coupled with persistent inflation—a classic stagflation scenario.
With Bitcoin ETFs bleeding capital and geopolitical tensions rising, market participants are bracing for heightened volatility. The interplay between digital asset markets, trade policies, and inflationary pressures will be crucial in shaping economic outcomes for the remainder of 2025.
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