Key Points
- Global crypto funds like BlackRock and Grayscale saw $415 million in outflows last week.
- This downturn, the first in five weeks, may be due to the US Federal Reserve’s hawkish signals and high inflation data.
Last week, international crypto funding products, including BlackRock, Bitwise, Fidelity, Grayscale, and ProShares, experienced a significant downturn. According to CoinShares, these funds saw $415 million in outflows.
This report marked the end of a five-week streak of consistent inflows. The sudden shift may be attributed to the hawkish signals from the US Federal Reserve and higher-than-expected inflation data.
The Impact on US and European Crypto Funds
James Butterfill, Head of Research at CoinShares, shed light on the reasons behind the decline. He stated that the outflows were triggered by the Congressional meeting with Fed Chair Jerome Powell, who signaled a more hawkish monetary policy stance, coupled with US inflation data exceeding expectations.
The majority of the outflows came from US-based crypto funds, with withdrawals reaching $464 million. Meanwhile, digital asset investment products in other regions, particularly in European markets, remained relatively stable. For instance, Germany recorded $21 million in inflows, while Switzerland and Canada also saw positive numbers, adding $12.5 million and $10.2 million, respectively.
US spot Bitcoin ETFs played a significant role in the week’s downturn, contributing $580.2 million to the general net outflows. Bitcoin, sensitive to interest rate expectations, bore the brunt of investor outflows, totaling $430m last week. Interestingly, there were no corresponding inflows into short-Bitcoin products, which instead saw outflows of $9.6m, as noted by Butterfill.
Future Expectations for Crypto Investors
Market analysts are generally hesitant about what to expect, given how quickly investor sentiment can shift. However, some, like Bitget Research’s Ryan Lee, believe that Bitcoin and Ethereum remain highly sensitive to macroeconomic factors. According to Lee, there is a possibility that Bitcoin surpasses $100,000 by the end of this week if it continues to attract strong ETF interest and holds above key support levels.
Lee is also optimistic about Ether, which he says could see a new bullish trend if it breaks through the $2,700–$3,000 resistance zone.
Despite the uncertainty shown by last week’s outflows, the crypto market remains hopeful that interest rate trends and regulatory developments will bring renewed momentum to digital assets.
