Ethereum funds bore the heaviest losses among all digital asset exchange-traded products last week as broader risk-off sentiment collided with growing concern about the Clarity Act, the upcoming U.S. crypto market structure bill.

That's pushed total crypto fund outflows to $414 million—the first weekly net negative in five weeks, according to CoinShares' weekly fund flows report.

Ethereum investment products shed $222 million, dragging the asset's year-to-date flows to a net outflow of $273 million—the worst of any crypto product tracked by the European digital asset manager.

As of late Monday morning, Ethereum was trading at $2,041 after having gained 2.3% in the past day as it recovered from a weekend slump, according to crypto price aggregator CoinGecko.



The Ethereum funds drawdown was "likely related to the Clarity Act news," CoinShares Head of Research James Butterfill wrote in a report. A new draft of the legislation has drawn scrutiny for its potential implications for staked ETH products and yield-bearing stablecoin programs.

"Regionally, the negative sentiment was almost solely focused on the U.S., seeing $445 million in outflows," he said, adding that "minor outflows were also seen in Switzerland totaling $4 million."

The Clarity Act fallout hasn't been limited to Ethereum funds.

USDC issuer Circle saw its shares drop roughly a quarter of their value in the past week on speculation that the new Clarity Act draft will specifically target yield-bearing stablecoin programs. Circle doesn't offer any yield on USDC directly, but it does benefit from exchanges like Kraken and Coinbase paying users rewards to hold USDC balances in their wallets.

The broader sell-off was driven by the same forces that rattled Bitcoin ETFs. Escalating geopolitical tensions around Iran and a sharp reversal in Federal Reserve rate expectations have also played a role.

Users on Myriad, a prediction market platform owned by Decrypt's parent company Dastan, have grown increasingly certain that the Fed will not cut rates by more than 25 basis points before July. At the time of writing, 91.5% of users on the platform think it won't happen.

A month ago, roughly 25% of traders thought that the Federal Open Market Committee might drop rates during its June meeting, according to the CME FedWatch Tool. But now traders are 97.4% certain the FOMC will hold the current rates—and 2.6% think the Fed might raise rates a quarter of a percentage point.

The FOMC will next vote on interest rates at its April 28 meeting.

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