While cryptocurrency investment products have attracted attention and capital flow throughout 2023, some recent developments have caused major outflows in the markets. According to CoinShares’ weekly report, there have been significant outflows of $72 million in total from Bitcoin and altcoin investment products. This amount is equal to the largest outflow figure in March. However, this situation shows regional differences. While the US markets in particular experienced major losses, a more resilient picture emerges in many European countries.
Macroeconomic uncertainties loom large in the Bitcoin and altcoin markets
When we look at the details of the report, it is seen that the main reason behind the outflows is the stronger-than-expected macroeconomic data in the US. This data, announced last week, weakened the possibility of the US Federal Reserve (Fed) cutting interest rates, while strengthening the possibility of a 25 basis point rate cut in the markets. This situation reduced investors’ risk appetite and paved the way for large-scale outflows in crypto asset markets.
However, when employment data released later in the week fell short of expectations, daily output began to slow. This data reopened the possibility of a 50 basis point rate cut. Markets are now looking at the Consumer Price Index (CPI) inflation report to be released on Tuesday. If inflation is lower than expected, a 50 basis point rate cut could become more likely.
There are huge outflows in the US and Canada
Regionally, outflows are almost entirely focused on the US. In the US, there was a total outflow of $721 million from crypto-asset investment products. This is a remarkable figure not only for the US but also for all crypto-asset markets. A similar picture can be seen in Canada, where a total outflow of $28 million was recorded.
On the other hand, European markets were largely unaffected by these outflows. Germany and Switzerland, in particular, showed a positive picture in crypto asset markets. Germany saw inflows of $16.3 million, while Switzerland saw inflows of $3.2 million. This suggests that investors in Europe are less affected by economic uncertainties in the US and have lower risk perceptions. This regional difference proves that investors’ reactions to macroeconomic developments in global markets can be variable.
Latest situation in Bitcoin and Ethereum
Another important detail in the report is the capital movements in Bitcoin and Ethereum. Bitcoin was the crypto asset that took the biggest hit with a total outflow of $643 million. Short position Bitcoin products showed a relatively smaller movement, recording an inflow of $3.9 million. This situation reveals that some investors are aiming to benefit from possible declines in Bitcoin prices. You have the chance to see the altcoin products that recorded inflows and outflows in the table below. According to the table, funds also exited from Cardano. There is an increase in funds in cryptos such as XRP and LTC.
On the Ethereum side, there was an outflow of $98 million. The majority of these outflows originated from Grayscale Trust, one of the largest players in the market. On the other hand, it is seen that inflows from newly launched exchange-traded funds (ETFs) have almost completely stopped. Ethereum’s performance is closely related to the uncertainties of large investors in the market and their reactions to macroeconomic indicators.
Another noteworthy data that stood out in the report was the inflows in Solana. Solana recorded the largest inflows of $6.2 million, unlike other assets. This may be closely related to the technological developments that Solana has experienced recently and the growth in its ecosystem. Solana continues to attract the attention of investors, especially with its low-cost and fast transaction infrastructure.
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