Shares of the iShares Ethereum Trust ETF slid 3.0% to $13.13 Wednesday after the Federal Reserve held rates at 3.50%–3.75% but delivered a sharply hawkish set of projections at new Chair Kevin Warsh's debut meeting. The median year-end rate estimate jumped to 3.8%, up from 3.4% in March, signaling at least one rate hike this year.
Nine of 18 Fed officials who submitted projections now expect a rate increase in 2026. For an ETF that is a pure pass-through to the price of ether — offering no yield, no earnings, no dividends — the shift toward tighter money strikes at the heart of the investment case.
Half the Fed Now Sees a Rate Hike, and That Changes the Math for Crypto
With one or more rate hikes becoming increasingly likely, markets turned decidedly lower Wednesday afternoon, with the Nasdaq and S&P 500 each dropping more than 1%.
Bitcoin fell 1.6% to $64,600 while the two-year Treasury yield soared 14 basis points to 4.19%. Higher yields raise the cost of holding assets that generate no income — exactly what ether is. When a risk-free Treasury pays more, investors have less reason to park money in volatile crypto.
Ethereum Is Down Nearly 27% in Three Months, and Outflows Are Building
ETHA recorded outflows of $4.53 million on June 15, modest against $4.75 billion in assets, but ether itself has fallen about 26.9% over the past three months.
Over the past month, ETHA has hemorrhaged roughly $689 million in net outflows. That signals institutional investors are steadily reducing exposure, not merely trimming around the edges.
Warsh's Communication Overhaul Adds a Layer of Uncertainty
Warsh confirmed he declined to submit his own rate forecast and announced task forces to overhaul Fed communications, including the future of the dot plot itself. Less forward guidance from the Fed means more guesswork for traders — and crypto, already the most speculative corner of the market, tends to sell off hardest when uncertainty spikes.
A Potential Lifeline: Geopolitics and a Major Upgrade
A U.S.–Iran peace deal expected Friday could reopen the Strait of Hormuz and ease energy-driven inflation, the very pressure keeping the Fed hawkish. Meanwhile, Ethereum developers have entered the final stage of "Glamsterdam," an upgrade described as the network's biggest overhaul since it switched to a less energy-intensive system in 2022. Neither catalyst, however, changes today's reality: the Fed's rate path just got harder, and ETHA holders are absorbing the blow with no yield cushion.