U.S. spot Bitcoin exchange-traded funds (ETFs) saw a notable downturn last week, with combined net outflows amounting to $580.6 million, marking the first negative week in five weeks, according to a report from CoinShares.

Grayscale's GBTC ETF led the outflows, shedding $274.3 million, followed by ARK Invest's ARKB with $149.7 million and Fidelity's FBTC at $146.3 million in net outflows. BlackRock's IBIT, however, bucked the trend with net inflows of $41.6 million. Overall, since their inception in January, these ETFs have garnered total net inflows of $15.1 billion.

The positive streak for spot Bitcoin ETFs ended abruptly after 19 consecutive days of gains, coinciding with bitcoin's price drop following conflicting U.S. economic data on non-farm payrolls and unemployment. Investor uncertainty, particularly ahead of the Federal Open Market Committee (FOMC) meeting, contributed to $200.4 million in outflows on Tuesday.

The FOMC meeting brought a brief respite with a single day of net inflows amounting to $100.8 million, driven by market expectations around interest rate decisions amid inflation concerns. However, sentiment turned sharply negative afterward, with Thursday and Friday recording net outflows of $226.2 million and $189.9 million, respectively.

Globally, digital asset investment products experienced significant net outflows totaling $600 million, the largest since March 22. CoinShares' Head of Research, James Butterfill, attributed this bearish sentiment to a "more hawkish-than-expected FOMC meeting," prompting investors to reduce exposure to fixed-supply assets like bitcoin. Notably, bitcoin alone saw $621 million in outflows, with some inflows noted in short-bitcoin products.

The broader crypto market also saw a downturn, with a 5% drop in bitcoin's price contributing to a decline in global assets under management from $100 billion to $94 billion, according to Butterfill. Trading volumes for global digital asset investment products remained subdued at $11 billion, well below the weekly average of $22 billion for the year.

Despite the challenges faced by bitcoin ETFs, ethereum-based investment products bucked the trend, recording $13 million in net inflows globally. This divergence suggests a potential shift in investor interest towards alternative cryptocurrencies amid market volatility and regulatory developments.

Looking ahead, the approval process for spot Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC) remains a focal point. Approval for these ETFs could unlock significant market participation, similar to historical trends seen with gold and silver ETF launches, potentially diversifying investor portfolios beyond bitcoin.

The anticipated launch of spot Ethereum ETFs is awaited eagerly, with analysts estimating a potential launch date as early as July 2, pending SEC regulatory approvals. This development could provide further insights into market dynamics and investor sentiment moving forward.