Investors Pull $415M from Crypto Funds: A Turning Point or Further Dip?

Latest CoinShares weekly report has revealed a notable shift in last week’s crypto asset investment products, with the first major outflows reported after a prolonged 19-week streak of inflows. CoinShares particularly detailed $415 million in outflows, marking a sharp reversal from the previous weeks’ steady gains.

According to James Butterfill, Head of Research at CoinShares, This new trend comes in the wake of several key economic events in the US, including hawkish comments from US Federal Reserve Chair Jerome Powell and higher-than-expected inflation data, which may have influenced investor sentiment.

Butterfill particularly wrote:

We believe these outflows were triggered by the Congressional meeting with Fed Chair Jerome Powell, who signalled a more hawkish monetary policy stance, coupled with US inflation data exceeding expectations.

Detailing The Fund Flows

CoinShares report showed that Bitcoin, which has been “highly sensitive” to interest rate forecasts, bore the brunt of these recent outflows seeing roughly $430 million in outflows.

Notably, there were no significant inflows into short-Bitcoin products, suggesting that investors were not pivoting to bearish positions but rather stepping back from the market altogether. This indicates a cautious approach among investors as they weigh potential future rate hikes and inflation pressures.

While Bitcoin faced heavy outflows, other assets managed to attract inflows. Solana led the way with $8.9 million, followed closely by XRP and Sui, which saw $8.5 million and $6 million respectively.

Blockchain equities also showed resilience, recording $20.8 million in inflows, bringing year-to-date totals to $220 million. Meanwhile, most of the outflows were concentrated in the United States, totaling $464 million, while countries such as Germany, Switzerland, and Canada reported inflows.

Crypto Market Performance

Despite this negative fund flow performance from the crypto market last week, this week although still fresh doesn’t appear to want to be any different so far. In the early hours of Monday, Bitcoin saw a brief dip to $95,000 levels after falling below the $96,000 price mark.

At the time of writing, the asset currently trades at $96,451 marking not only a 0.3% decline in the past day but 11.4% decrease away from its all-time high above $109,000, registered in January.

Notably, this decrease in Bitcoin’s price just today alone has resulted in over $4 billion removed from the global crypto market cap valuation. As of now, the overall crypto market valuation sits at $3.34 trillion marking a 2% plunge in the past day.

Interestingly, amid this bearish sentiment, Ethereum has bucked the trend with the asset seeing a positive performance. Over the past day, ETH is in green rising by 3.8% to a current trading price of $2,790.

When zoomed out, it is seen that this positive performance from ETH has been quite gradual erasing the negative performances from the asset in recent weeks.

Featured image created with DALL-E, Chart from TradingView