U.S. spot Bitcoin (CRYPTO: BTC) ETFs recorded $296 million in net outflows for the week ending March 27 amid the ongoing war between the U.S. and Iran.

The Single-Day Bleed

The weekly outflow stems from a $225.5 million exodus on March 27, the heaviest single-day bleed of the week, according to SoSoValue data. 

BlackRock’s IBIT (NASDAQ:IBIT) fund shed $201.5 million on that day alone, marking the largest single-fund outflow over the five-day trading period.

Total net assets for U.S. spot Bitcoin ETFs declined 7.5% from a March 23 peak of $91.7 billion to $84.8 billion by Friday’s close. 

The shift reversed recent positive momentum after several weeks of healthy inflows month-to-date.

Moreover, Ethereum (CRYPTO: ETH) investment products recorded the largest global withdrawals of $222 million, pushing year-to-date flows to a net outflow of $273 million—the weakest among major digital assets. 

Global Crypto Funds Turn Negative

Global digital asset investment vehicles recorded $414 million in outflows during the same week, marking the first net withdrawals in five weeks, according to CoinShares Head of Research James Butterfill. 

He attributed the outflows to investor concerns over the increasingly drawn-out Iran conflict and prospects of higher inflation.

Total assets under management across global funds declined to $129 billion, revisiting levels last seen in early February and comparable to April 2025 during the initial phase of Trump’s tariffs.

Regionally, the United States accounted for $445 million of outflows, while funds in Germany and Canada logged inflows of $21.2 million and $15.9 million respectively as some investors bought the dip. Switzerland recorded a smaller $4 million outflow.

The Rate Hike Pressure

“The immediate impact I can think of is higher inflation triggered by higher oil prices, which in turn could reduce the chances of rate cuts during 2026,” said Alexandre Schmidt, research analyst at CoinShares. 

“As a result, market liquidity could be reduced and fewer flows going towards assets such as Bitcoin,” he added.

High interest rates discourage investors from betting on risk-on assets, creating headwinds for Bitcoin and crypto ETFs. 

Schmidt noted that while traders previously deemed interest rate cuts a foregone conclusion this year, they’re now increasingly buying into the idea that central banks may hike rates in 2026.

The Japan Wildcard

Schmidt recently returned from meetings with Japanese investors, where he observed a strong push to regulate crypto and eventually launch ETFs there. 

While newly elected Prime Minister Sanae Takaichi doesn’t appear to have strong crypto views, Finance Minister Satsuki Katayama holds a positive stance on crypto assets.

“That would be a significant market development,” Schmidt said, “as appetite for crypto is strong among Japanese investors, especially retail.”

Photo: Ryvius on Shutterstock.com