Crypto ETFs: in the Turbulent Times Ahead?

The cryptocurrency market has seen wild swings lately. Bitcoin, the top crypto by market value, dropped about 12% in the past week as of early February 2026. It fell below $80,000, marking its lowest point since November. From its peak in October last year, Bitcoin has lost around one-third of its value. Ethereum took an even bigger hit, down 21% in the same period.

What’s driving this sell-off? Fears of tighter money policy from the U.S. Federal Reserve. President Donald Trump picked former Fed Governor Kevin Warsh as the next Fed chair. Warsh has a hawkish reputation—he wants less liquidity to fight inflation and a smaller Fed balance sheet. This news boosted the U.S. dollar, with the Invesco DB US Dollar Index Bullish Fund (UUP) up about 1%.

Why Fed Moves Shake Crypto Hard

Cryptos like Bitcoin and Ethereum thrive on easy money. When the Fed cuts rates and pumps liquidity into markets, investors pour cash into risky assets like crypto. But now, the opposite is in play. The Fed paused its rate cuts in January 2026. Big banks like J.P. Morgan see just one cut this year.

A stronger dollar and less easy money hurt crypto prices. Markets stay nervous until clearer signals come after May. Full hawkish policy might not happen under Trump—he likes low rates—but uncertainty rules. This means cryptocurrency ETFs face headwinds for now.

Inverse ETFs: Betting on the Downside

Smart investors can play this with inverse crypto ETFs. These funds rise when crypto falls. Top picks include:

• ProShares Short Bitcoin ETF (BITI) – Tracks the opposite of Bitcoin’s price.
• ProShares Short Ether ETF (SETH) – Does the same for Ethereum.
• ProShares UltraShort Bitcoin ETF (SBIT) – Leveraged bet against Bitcoin (2x inverse).
• ProShares UltraShort Ether ETF (ETHD) – Leveraged inverse for Ethereum.

These tools let you profit from dips without selling crypto directly. But remember, they’re for short-term trades—volatility cuts both ways.

AI Boom: A Silver Lining for Crypto?

While crypto hurts, AI stocks show mixed signals. Overvaluation worries and rate hike bets hit them too. But Palantir’s strong earnings and guidance lifted spirits. Oracle’s $25 billion bond sale for AI infrastructure adds fuel, signaling big spending ahead.

Some experts link AI growth to crypto. Risk-on moods from AI could spill into crypto. Semiconductors power both—AI data centers and crypto mining rigs need GPUs and ASICs. But a chip shortage could raise mining costs, slow network growth, and push out small miners. This might cap crypto’s upside.

Crypto’s future ties to tech supply chains. Watch semis closely.

Regulatory Wins Offer Hope

Not all news is bad. The GENIUS Act, passed in June 2025, sets clear rules for crypto. It demands full reserve backing and monthly audits. Easing oversight builds trust. This could draw more institutional money to Bitcoin ETFs and others long-term.

Still, no monster rally like late 2024’s Trump bump seems likely soon. Markets need Fed clarity first.

Key Factors to Watch for Crypto ETFs

What’s Next: ?

Cryptocurrency ETFs sit at a crossroads. Short-term from policy fears looks likely. Inverse plays like BITI and SETH could shine. But long-term waits with regulatory clarity and tech ties.

Investors: Stay nimble. Track Fed meetings, dollar moves, and chip news. Diversify beyond crypto—AI and strong sectors offer balance.

The crypto ride stays bumpy. Will it be more ahead? Only time—and Fed dots—will tell.

Keywords: cryptocurrency ETFs, Bitcoin ETF, Ethereum ETF, inverse crypto ETFs, Fed policy impact on crypto