Recent data from CoinShares revealed that crypto funds experienced outflows totaling $600 million in the week ending June 14. This came after five consecutive weeks of inflows, signaling a shift in investor sentiment towards digital assets. The outflows were primarily seen in Bitcoin and Solana funds, with the former witnessing $621 million exits and the latter observing $0.2 million outflows. The decline in Bitcoin’s price during the week, coupled with a more hawkish tone from the Federal Open Market Committee (FOMC), contributed to this trend.
The FOMC meeting on June 11 and 12, during which interest rates were maintained at 5.25%-5.50%, played a significant role in prompting investors to pull out of crypto funds. Given the perception of crypto as a high-risk, speculative asset, the decision to hold interest rates led many investors to seek refuge in safer assets. Consequently, the outflows were predominantly concentrated in Bitcoin, with $621 million withdrawn from the leading crypto asset. Spot Bitcoin ETFs trading in the US also saw substantial outflows, totaling $580 million for the week.
Apart from Bitcoin, other assets also felt the effects of the outflows. Solana, which experienced a challenging week in terms of price action, recorded $0.2 million in outflows from its investment products. Additionally, multi-asset investment products saw outflows amounting to $1.1 million. Despite the overall negative sentiment in the market, some assets like Ethereum managed to attract inflows of $13.1 million. This increased interest in Ethereum was driven by anticipation surrounding the launch of Spot Ethereum ETFs.
The outflows and subdued trading volume had a noticeable impact on the total assets under management (AuM) for crypto funds. The AuM dropped from over $100 billion to $94 billion over the week, reflecting the turbulence in the market. The average trading volume for the week was around $11 billion, significantly lower than the $22 billion weekly average for the year. This decrease in trading activity further underscored the cautious approach adopted by investors in response to the changing market conditions.
While Bitcoin and Solana faced significant outflows, some altcoins witnessed inflows during the same period. BNB, Litecoin, XRP, Chainlink, and Cardano attracted inflows of $0.3 million, $0.8 million, $1.1 million, $0.7 million, and $0.8 million, respectively. This divergence in investor behavior towards different cryptocurrencies highlighted the diversity in the market and the varying levels of appeal that different assets hold for investors.
The recent outflows in crypto funds signify a shift in investor sentiment towards digital assets, driven by factors such as the FOMC meeting and Bitcoin’s price volatility. The impact of these outflows was felt across different assets, with some cryptocurrencies experiencing inflows while others faced substantial withdrawals. As the market continues to evolve, it is essential for investors to stay informed and adapt to changing conditions to navigate the dynamic landscape of cryptocurrency investments.
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