Last week, cryptocurrency funds faced significant outflows following a period of five weeks of consecutive inflows. According to data from CoinShares, digital asset funds saw a total of $600 million in net outflows for the week ending on June 14. The outflows were particularly concentrated in Bitcoin and Solana funds, with $621 million and $0.2 million exits, respectively. These outflows coincided with a decline in the price of Bitcoin and a more hawkish tone from the Federal Open Market Committee (FOMC) meeting held during the same week.
The recent outflows of $600 million marked the end of a strong $4.35 billion inflow trend over the previous five weeks. Investors made the decision to pull out of their exposure to more volatile assets like cryptocurrencies in response to the outcomes of the FOMC meeting. The FOMC had just concluded its meeting on June 11 and 12, 2024, maintaining interest rates within a range of 5.25% to 5.50%. This decision led many crypto investors to shift their investments towards safer assets with higher interest rates.
Unsurprisingly, a significant portion of the outflows came from Bitcoin investments, with the leading cryptocurrency asset experiencing a total of $621 million in outflows. Most of these outflows were observed in Spot Bitcoin ETFs trading in the U.S. Data reveals that Spot Bitcoin ETFs recorded outflows on every single day of the week, except for a modest $100.8 million inflow on June 12. As a result, these Bitcoin ETFs registered a sum of $580 million in outflows throughout the week. Investor sentiment towards Bitcoin was further reflected in the inflows of short Bitcoin products, which totaled $1.8 million.
Solana, which also witnessed a challenging week in terms of price movements, saw outflows of $0.2 million in its investment products. Additionally, multi-asset investment products suffered outflows amounting to $1.1 million. The trading volume for the week averaged around $11 billion, significantly below the yearly average of $22 billion. Consequently, the total assets under management (AuM) for cryptocurrency funds fell from above $100 billion to $94 billion over the course of the week.
While Bitcoin experienced outflows, Ethereum received $13.1 million in outflows as investor focus continued to shift towards the launch of Spot Ethereum ETFs. Other cryptocurrencies like BNB, Litecoin, XRP, Chainlink, and Cardano saw inflows of $0.3 million, $0.8 million, $1.1 million, $0.7 million, and $0.8 million, respectively. This variation in investor sentiment across different cryptocurrencies suggests a dynamic market environment with changing preferences and opportunities.
The recent outflows observed in cryptocurrency funds following a period of inflows illustrate the ongoing volatility and uncertainty in the digital asset market. Investors’ decisions to reallocate their investments in response to external factors like FOMC meetings and interest rate changes highlight the interconnectedness between traditional finance and the cryptocurrency space. As the market continues to evolve, it is crucial for investors to stay informed and adapt their strategies accordingly to navigate the ever-changing landscape of cryptocurrency investments.
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