ETF on Ethereum showed their best month since October, but the Fed cooled investors' enthusiasm.
Spot exchange-traded funds on Ethereum (ETH) ended July with an impressive result, recording the most significant capital inflow in nine months. However, the dynamics of the last week of the month show a worrying signal: interest from institutional players has begun to fade, and the reason is the position of the Federal Reserve.
July surge and sharp cooling
According to my calculations, based on data from analytical platforms, Ethereum funds attracted $365.17 million in July. This is the best figure since October 2025, which contrasts especially with May and June, when investors withdrew $540.88 million and $528.99 million from the products, respectively. It seemed that the market had finally turned in favor of the second-largest cryptocurrency by market capitalization.
But the recovery proved fragile. In the week ending July 31, inflows collapsed from $103.9 million to a modest $27.42 million — a drop of 74%. Even the rise in the price of ETH could not sustain demand. On July 27, the asset reached $1967, a high of almost two months, but by Friday quotes had pulled back to $1863.
This trend is not limited to Ethereum. Bitcoin ETFs lost $61.53 million over the same period, breaking a three-week streak of net inflows. Funds on Hyperliquid (HYPE) have recorded outflows for the third consecutive week — minus $14.75 million. The only bright spot remains XRP ETFs, which attracted $14.86 million, bringing total inflows to above $1.5 billion.
The Fed as the main brake
The key pressure factor is macroeconomic uncertainty. At the end of July, the Fed voted 9 to 3 to keep the key rate at 3.50–3.75%. Notably, three regional bank heads — Beth Hammack, Neel Kashkari, and Lorie Logan — voted for an increase, citing inflation that is stubbornly holding above the target level. The market already estimates the probability of a 0.25% hike in September at 64%.
Fed Chair Kevin Warsh made it clear that the committee does not intend to change course: "The decisions of this committee matter greatly, and if necessary, we will not hesitate." For risky assets, including cryptocurrencies, such rhetoric is a signal for caution.
If investors maintain a wait-and-see stance in August, the July decline could drag on and wipe out the entire monthly gain. However, the opposite scenario cannot be ruled out: a return of demand would turn the July surge into the beginning of a global upward trend. The key benchmark for the market is the Jackson Hole symposium in late August, where the Fed may provide clearer signals on future policy.
My conclusion: the current situation is a classic example of how macroeconomic factors outweigh intra-market dynamics. Institutions have not left the market, but their risk appetite directly depends on monetary policy. Until September, when the Fed's position becomes clearer, volatility and caution will dominate.