Over the past week, crypto investment products faced significant outflows totaling $600 million, the largest since March 2024. According to a CoinShares blog, this trend is likely driven by the recent Federal Open Market Committee (FOMC) meeting, which presented a more hawkish stance than investors anticipated.
Crypto Investment Outflow Trigger
The FOMC’s aggressive posture on monetary policy, indicating a steady rate to curb inflation, has prompted investors to reassess their exposure to fixed supply assets like Bitcoin (BTC).
The report revealed that the outflows were concentrated entirely on Bitcoin, with a staggering $621 million in outflows. Meanwhile, the recent outflows saw digital assets under management (AUM) fall from over $100 billion to $94 billion. However, while Bitcoin saw substantial outflows, there were inflows of $1.8 million into short Bitcoin products.
Likewise, some altcoins led by Ethereum (ETH), LIDO, and XRP saw significant inflows of $13 million, $2 million, and $1 million respectively.
The FOMC’s hawkish tone has amplified concerns over the future valuation of digital assets. Higher interest rates generally lead to a stronger U.S. dollar and tighter financial conditions, which can reduce the allure of riskier assets, including cryptocurrencies. This macroeconomic backdrop and Bitcoin’s inherent volatility have pushed investors to reconsider their portfolios and seek safer havens.
Bitcoin ETFs Record $200M Outflows
Last week, the eleven-spot Bitcoin Exchange-Traded Funds (ETF) recorded a net outflow of $200 million in a day. This marked the second-highest daily outflow since the beginning of May.
Market experts believe the outflows are a response to the Consumer Price Index (CPI) data release and the last FOMC meeting. Despite these short-term headwinds, QCP Capital maintains a long-term bullish perspective on Bitcoin. The firm sees potential buying opportunities arising from the currency market conditions.
Additionally, anticipated bullish events like the launch of a potential spot Ethereum ETF and the upcoming U.S. Presidential election could further influence the market.
Disclaimer: The information provided in this article is for informational purposes only. It does not constitute investment, financial, trading, or any other sort of advice. You should not treat any of Crypto-Vanguard’s content as such. Crypto-Vanguard does not recommend that any cryptocurrency should be bought, sold, or held by you. Do your due diligence and consult your financial advisor before making any investment decisions.