Bitcoin Suffers Largest Weekly Outflows Since March Amid Hawkish FOMC, While Ethereum Sees Inflows

• The outflow from crypto funds reached a significant peak last week, marking a three-month high.
• While Bitcoin (BTC) saw noticeable outflows, Ethereum (ETH) investment products experienced inflows exceeding $10 million.
• Digital asset investment products saw outflows totaling $600 million last week, according to CoinShares’ latest report.

An expert analysis of last week’s crypto fund movements, highlighting the significant outflows and contrasting inflows in BTC and ETH.

Substantial Outflows Hit Cryptocurrency Funds

The previous week saw a marked exit from digital asset investment products, with a total outflow of $600 million. This was the largest outflow since March 22nd, as reported by CoinShares. The report attributes this trend to a surprisingly hawkish stance from the Federal Open Market Committee (FOMC), which led many investors to reduce their exposure to fixed-supply assets.

Impact of FOMC Stance on Crypto Investments

CoinShares identified the hawkish tone of the latest FOMC meeting as a primary catalyst for the outflows. Despite maintaining interest rates between 5.25% and 5.50% for the seventh session in a row, the market’s reaction was one of caution. The investment community’s reduced appetite for risk was apparent, as the total assets under management (AUM) for crypto-related products dropped by 6%, from $100 billion to $94 billion within the week.

Performance of Key Cryptocurrencies

Bitcoin-backed investment products were significantly impacted, with outflows amounting to $621 million. This decrease negatively affected Bitcoin’s year-to-date (YTD) flows, which fell by 4% to $16.1 billion during the review period. The bearish climate also spurred $1.8 million in inflows into short-bitcoin products, highlighting a tactical move by investors hedging against further declines in BTC.

Ethereum and Other Altcoins Show Resilience

On the other hand, Ethereum displayed resilience with $13 million in inflows, pushing its YTD inflows to $94 million. Several other altcoins also saw positive inflows. Lido (LDO) attracted $2 million, XRP garnered $1 million, Chainlink (LINK) received $800,000, and Binance Coin (BNB) pulled in $300,000. This positive trend among altcoins signals investor confidence in a diversified crypto portfolio amid Bitcoin’s volatile performance.

Conclusion

Last week’s crypto market dynamics underscore the volatile nature of digital asset investments, with significant outflows from Bitcoin products contrasting with inflows into Ethereum and other altcoins. The hawkish tone from the FOMC has influenced a cautious stance among investors, leading to notable shifts in investment patterns. Moving forward, understanding these trends will be crucial for investors looking to navigate the complexities of the crypto market efficiently.