Crypto Markets Explode: $1.9B Floods In Following Fed’s First 2025 Rate Cut

Digital assets just got their rocket fuel.

The Federal Reserve's first interest rate cut of 2025 triggered an immediate tidal wave of capital into cryptocurrency markets—$1.9 billion worth of inflows in a matter of days. Traders abandoned traditional safe havens, chasing higher yields in the decentralized finance space.

Wall Street's Loss Is Crypto's Gain

While bond yields tanked and traditional finance desks scrambled to adjust their models, digital asset ETFs saw record-breaking volume. The move signals a fundamental shift in how institutional investors view crypto—no longer just a speculative gamble, but a legitimate hedge against monetary policy changes.

Of course, the old guard will call it irrational exuberance. They always do when their 1% returns get shown up by an asset class that actually understands what 'disruption' means.

The floodgates are open. Let's see if traditional finance can swim.

Bitcoin and Ethereum Lead $1.9B Crypto Inflows Following Fed Move

The Fed lowered its benchmark rate by 25 basis points on September 17, trimming the target range to 4.25%. It was the first cut since 2023, coming after a series of weaker labor market readings and softer inflation data.

While the move was characterized as a “hawkish cut,” with policymakers signaling caution on further easing, investors turned to crypto products later in the week, with $746 million flowing in on Thursday and Friday alone.

Bitcoin funds attracted the largest share, with $977 million in inflows. The gains followed $2.4 billion of inflows the prior week, bringing Bitcoin’s four-week total to $3.9 billion, according to SoSoValue.

Short-Bitcoin products continued to weaken, recording $3.5 million in outflows and driving their total AuM to a multiyear low of $83 million.

Ethereum also benefited strongly, seeing $772 million in inflows. That pushed its year-to-date total to a record $12.6 billion, underscoring the renewed demand for Ether-backed exchange-traded products.

Solana and XRP also drew investor interest, with inflows of $127.3 million and $69.4 million, respectively.

Market reaction to the Fed’s cut was volatile. Bitcoin briefly rose above $117,000 last Thursday before retracing to $115,089 at press time, down 1.2% in 24 hours and sitting 7% below its all-time high of $124,128.

Ether traded as high as $4,600 during the week before slipping back to around $4,465. More than $105 million was liquidated across the crypto market following Fed Chair Jerome Powell’s press conference, with $88.8 million in long positions wiped out alongside $17 million in shorts.

The Fed cut rates to 4.25%, citing weaker jobs and softer inflation. Markets now watch how $BTC responds. #FOMC #Crypto #Bitcoinhttps://t.co/MnywKi4A4V

Institutional interest also remained strong through spot ETFs. On September 19, bitcoin spot ETFs saw a total net inflow of $222.6 million.

BlackRock’s iShares Bitcoin Trust led with $246.1 million in daily inflows, while Grayscale’s GBTC posted $23.5 million in outflows.

The cumulative net inflow into Bitcoin spot ETFs now stands at $57.7 billion, with total net assets of $152.3 billion, representing 6.6% of Bitcoin’s market capitalization.

Ethereum ETFs also recorded notable activity. BlackRock’s ETHA product led with $144.3 million in inflows, while Grayscale, Fidelity, and Bitwise products saw modest outflows.

Overall, the sector’s AuM hit $40.3 billion, its highest level on record.

Crypto ETF Race Heats Up as SEC Clears Faster Listings, New Products Debut

The wave of fresh capital into crypto funds coincided with a flurry of ETF activity in Washington.

On Tuesday, five new applications were filed with the U.S. Securities and Exchange Commission, signaling issuers’ growing appetite for products tied to assets beyond Bitcoin and Ethereum.

Crypto ETF filings flood the SEC with Avalanche, Sui, and Bonk products as 92 applications await October deadlines, testing regulatory limits.#Crypto #ETFshttps://t.co/PcKzgVk0hm

The latest lineup includes Bitwise’s proposed spot Avalanche ETF, Defiance ETFs designed around Bitcoin and Ethereum basis trades, and Tuttle Capital’s “Income Blast” funds tracking Bonk, Litecoin, and Sui. T-Rex also entered the race with a leveraged 2x Orbs ETF.

ETF Institute co-founder Nate Geraci noted that the sector should expect “floodgates” of filings in the months ahead. These additions bring the number of pending crypto ETF applications above 92, with most facing SEC deadlines in October and November.

The pressure on regulators intensified on Wednesday, when the agency approved new listing standards for Nasdaq, Cboe BZX, and NYSE Arca.

The SEC has approved new rules allowing Nasdaq, Cboe and NYSE to fast-track crypto spot ETFs, opening the door to wider listings.#SEC #CryptoETFs https://t.co/IfxwJIqJ0K

The rules will allow exchanges to list commodity-based trust shares, including crypto spot ETFs, without case-by-case reviews, cutting the timeline from more than 200 days to as little as 75.

The first products to benefit are expected to be solana and XRP spot funds.

Notably, the SEC has approved Grayscale’s Digital Large Cap Fund (GDLC), marking the first multi-crypto ETP to hit the market.

The same day, two new ETFs began trading in Chicago: the Dogecoin ETF (DOJE) on Cboe BZX, which recorded $6 million in its first hour, and the spot XRP ETF (XRPR), which topped $24 million within two hours.

Both funds are issued by REX Shares and Osprey Funds.

$GDLC (the first spot crypto '5' basket ETF) did $22m on its first day as an ETF. Really solid. $DOJE did $12m and $XRPR did $15m. All of them crush the avg ETF launch altho far cry from bitcoin. Still, gotta be happy with that if you are those issuers.

Bloomberg analyst Eric Balchunas reported that DOJE and XRPR, along with the first spot crypto “basket” ETF ($GDLC), all exceeded average launch volumes, though they still trailed Bitcoin products.