Crypto investment products see outflows for second consecutive week — CoinShares

For the second week in a row, there have been decreases in investments towards digital asset funds. Data from CoinShares, a digital asset investment firm, indicates a total withdrawal amount of $206 million during the period between April 15-19.

Over the last seven days, a total of $192 million worth of Bitcoin (BTC) funds left the market. This exit occurred just before the much-anticipated halving event. Similarly, Ethereum (ETH) investment products recorded an outflow of $34 million, making it their sixth consecutive week with negative inflows.

The past eleven weeks have seen a decrease in investment in blockchain stocks, resulting in a total withdrawal of approximately $9 million from the sector.

Crypto investment products see outflows for second consecutive week — CoinShares

Based on CoinShares’ analysis, the decline may be due to investor apprehensions over increasing US interest rates. These higher rates make safer investments more enticing than riskier assets like cryptocurrencies.

If economic conditions permitted, the Federal Reserve had planned to loosen its monetary policy around mid-2024. However, rising inflation concerns have cast doubt on this timeline. In March alone, the Consumer Price Index jumped by 3.5%, surpassing forecasts for the third month in a row. As a result, it seems that lower interest rates may not materialize until 2025. The federal funds rate is presently set between 5.25% and 5.50%.

“The data suggests appetite from ETP/ETF investors continues to wane, likely off the back of expectations that the FED is likely to keep interest rates at these high levels for longer than expected.”

The weekly trading volume for Bitcoin ETFs dipped slightly to $18 billion. Despite Bitcoin funds experiencing outflows, this wasn’t taken as a sign to sell Bitcoin short by investors. CoinShares noted that this pattern suggests investors are reducing their exposure to volatility but don’t foresee an imminent price crash for Bitcoin.

The reported data shows that these Bitcoin volumes make up just 28% of the overall Bitcoin trading volume, which has been increasing, contrasting with the 55% share they held a month prior.

The rate at which money has been flowing into Bitcoin ETFs has noticeably decreased since its highest point in March. In contrast, BlackRock’s iShares Bitcoin Trust (IBIT) saw consistent demand from investors this month, attracting approximately $1.4 billion as of April 19th.

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2024-04-22 21:41