U.S. spot Bitcoin exchange-traded funds absorbed roughly $2.9 billion in net inflows after the Federal Reserve raised rates in September, according to SoSoValue, showing that demand for regulated crypto exposure remained resilient even as policymakers signaled borrowing costs could stay higher for longer.
The Fed’s minutes from its Sept. 15–16 meeting, released on Oct. 8, showed that most Federal Open Market Committee participants viewed another rate increase before the end of 2026 as potentially appropriate. Officials did not commit to an October move and stressed that future decisions would be made meeting by meeting, based on inflation, employment and financial conditions.
The September decision lifted the federal funds target range by 25 basis points to 3.75%–4.00%, with all 12 voting members supporting the move. According to the minutes, all 19 officials attending the meeting backed the decision. It was the Fed’s first increase since July 2023.
Bitcoin initially fell to about $82,300 following the minutes’ release before recovering toward $83,000 in morning trading. Major altcoins also declined, with many falling more than 3% over the same period. The reaction reflected a market still sensitive to signals that U.S. rates may remain elevated, even though ETF subscriptions have recently provided a substantial source of demand.
Fed officials see inflation risks remaining tilted higher
The minutes portrayed a central bank concerned that inflation has stopped improving quickly enough. Fed staff estimates cited in the document placed August headline personal consumption expenditures inflation at about 3.8%, while core PCE inflation, which excludes food and energy, was estimated near 3.4%.
The Fed targets 2% inflation, making those readings difficult to reconcile with an early move toward lower rates. Participants said progress on disinflation in recent months had been insufficient, and the minutes described inflation risks as almost uniformly tilted to the upside.
Officials identified several potential sources of renewed price pressure. These included energy costs affected by geopolitical developments, tariffs, and investment in artificial-intelligence infrastructure that could lift input costs and prices for technology-related goods.
Economic conditions also gave policymakers room to keep policy tight. The minutes described the economy as expanding at a solid pace, consumption as resilient, and unemployment as near 4.1%. Several participants said the policy setting before September’s increase had been “not restrictive or only slightly restrictive,” indicating that some officials believed financial conditions had not been tight enough to reliably bring inflation back to target.
Treasury yields reinforced that backdrop. Yields across the two-year to 10-year maturities rose by about 35 basis points during the period between the Fed’s meetings, according to the minutes. Equity valuations remained high and credit spreads stayed narrow, conditions the committee viewed as supportive of economic growth rather than as evidence of broad financial stress.
ETF demand reversed sharply after the September decision
The ETF flow data offers a different view of market positioning. SoSoValue recorded approximately $750 million in combined net outflows from U.S. spot Bitcoin ETFs during the two trading days before the Sept. 16 rate decision. From Sept. 17 through the end of the month, the same funds took in around $2.9 billion.
Total net inflows for September were about $2.65 billion, according to SoSoValue, with nearly all of the monthly demand arriving after the rate increase. The week ending Sept. 25 brought roughly $2.4 billion in net inflows, the largest weekly total since October 2025. Sept. 21 alone accounted for close to $1 billion of subscriptions.
BlackRock’s iShares Bitcoin Trust, trading under the ticker IBIT, captured the largest share of that activity. The concentration reflects the fund’s position as the largest vehicle in the U.S. spot Bitcoin ETF market, where liquidity and established distribution channels can shape how institutional and wealth-management demand enters the asset class.
Spot Ethereum ETFs also recorded net inflows during the period, taking in about $690 million, according to SoSoValue. The parallel demand suggests the September move was not limited solely to Bitcoin, although Bitcoin products remained the dominant destination for new allocations.
The turnaround followed a weak first half for U.S. spot Bitcoin funds. By mid-July, cumulative 2026 net outflows had reached about $5.8 billion, SoSoValue data showed. Within roughly a week of the September hike, cumulative flows for the year had returned to positive territory.
By early October, spot Bitcoin ETFs had drawn about $57.8 billion in cumulative net inflows since launch and held approximately $110 billion in net assets, according to SoSoValue. Flows became more mixed in October, including roughly $120 million in net inflows on Oct. 6, while the platform’s 30-day measure showed about $3.5 billion in net inflows.
Markets price a pause, but retain expectations for another hike
Prediction-market expectations shifted after the minutes. Polymarket showed an 84% probability that the Fed would leave rates unchanged in October, up 35 percentage points over the previous week. At the same time, the probability of one additional increase before year-end remained above 70%.
That pricing broadly matches the language in the minutes: officials left room for a near-term pause without signaling that the tightening cycle had ended. The committee’s focus was less on an imminent recession than on an economy with steady employment, firm investment and inflation readings that remain above target.
For crypto markets, the next phase will depend on whether incoming inflation data supports the Fed’s concern or weakens the case for another increase. PCE and consumer-price readings above 3% would likely keep rate expectations restrictive, while continued ETF demand would show whether regulated fund buyers are willing to maintain exposure despite higher Treasury yields and a more cautious monetary outlook.
Want to see how Fed moves ripple through crypto ETFs? Read our breakdown in this detailed analysis next.
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