Investors withdraw $1.2 billion from crypto funds as Fed rate cut pessimism rises
Cryptocurrency assets have witnessed consecutive weeks of withdrawals, with the past week seeing an exodus of $584 million, culminating in a fortnight total of $1.2 billion. CoinShares, a prominent asset management entity, interprets this trend as likely rooted in investor skepticism concerning anticipated reductions in interest rates by the Federal Reserve within the current year.
Bitcoin (BTC) bore the brunt of these outflows, with investors pulling out $630 million in the last week alone. Despite this bearish outlook, there hasn't been a notable uptick in bearish bets against BTC, which only experienced a minor $1.2 million in outflows.
On the flip side, Ethereum (ETH) wasn't spared from the downturn, recording outflows of $58 million. Yet, it wasn't all gloom for altcoins, as Solana, Litecoin, and Polygon managed to attract inflows of $2.7 million, $1.3 million, and $1 million, respectively, buoyed by recent drops in their prices.
Interestingly, multi-asset investment vehicles saw an influx of $98 million, an indicator that some market participants are seizing the lower altcoin prices as purchasing opportunities, as underscored by analysts at CoinShares.
From a geographical standpoint, the United States led in outflows, totaling $475 million, with Canada trailing at $109 million. Both Germany and Hong Kong also witnessed withdrawals, amounting to $24 million and $19 million, respectively. On the brighter side, Switzerland and Brazil bucked the trend by absorbing inflows of $39 million and $8.5 million, in that order.
This period also recorded the lowest activity levels in exchange-traded products (ETPs) since the inception of US-based ETFs in January, with transactions barely reaching $6.9 billion.
