The cryptocurrency market was shaken by the hawkish Federal Open Market Committee (FOMC) meeting, which came after US inflation data met expectations. Bitcoin investment products saw a total outflow of $621 million last week, according to a report by asset management company CoinShares. This stood out as the highest withdrawal recorded since March. According to the report, while there was an outflow from SOL coin and Bitcoin on a weekly basis, it was noted that there was an inflow of funds into cryptos such as Ethereum, BNB, Litecoin, short Bitcoin, XRP and Cardano. Here are the details…
CoinShares report: What happened in the market?
cryptokoin.com As we reported, last month’s US consumer price index (CPI) data created optimism in the market by showing that inflation remained stable, contrary to expectations. However, this positive sentiment was overshadowed by the Fed’s decision to keep interest rates in the current 5.25%-5.50% range and forecast only a single 25 basis point rate cut this year. This decision, interpreted as a more aggressive stance, pushed Bitcoin prices down to $65,100, the lowest level in four weeks. At the time of writing, Bitcoin price is at $66,000.
The index, which measures the performance of the broader crypto-asset market, lost 1.75%. According to the CoinShares report, investors exited crypto asset investment products totaling $600 million by reducing their investments in fixed-supply assets following a more hawkish than expected FOMC meeting. All of these outflows occurred in Bitcoin, and a total withdrawal of $621 million was recorded. The bearish trend in the market also brought $1.8 million inflow to short Bitcoin investments. The report also stated that there were inflows in investment products of various altcoins such as Ethereum, LIDO and XRP. We will go into detail about this in the last paragraph.
Why are investors withdrawing?
We see a similar situation repeated in March. A hawkish FOMC meeting followed by significant inflows led investors to reduce their investments in fixed-supply assets. These outflows and recent price declines have caused total assets under management (AuM) to fall by over $100 billion to $94 billion in a week. Weekly transaction volume remains at 11 billion dollars, below this year’s average volume of 22 billion dollars. However, this figure is considerably higher than last year’s weekly average of $2 billion. Cryptoasset ETPs maintain a stable 31% share of global trading volume on trusted exchanges.
When we look at the geographical distribution, we see that the highest outflow occurred in the USA with 565 million dollars. However, negative investor sentiment is not limited to the United States. Canada, Switzerland and Sweden recorded outflows of $15 million, $24 million and $15 million, respectively. Germany was the only country that bucked this trend with an inflow of 17 million dollars.
Cryptocurrency from the SOL coin project enters those assets
According to CoinShares’ chart, there is a small outflow of $200k from SOL coin. There was a huge fund outflow of $621 million from Bitcoin. Ethereum saw $13.1 million, BNB $300 thousand, and Litecoin $800 thousand. Short Bitcoin, XRP, Cardano and Chainlink recorded inflows of $1.8 million, $1.1 million, $700 thousand and $800 thousand respectively.
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