- Crypto funds recently experienced significant outflows after a prosperous streak of five consecutive weeks of inflows.
- CoinShares data reveals that digital asset funds encountered $600 million in net outflows for the week ending June 14.
- The outflows were predominantly from Bitcoin and Solana funds, with Bitcoin seeing $621 million in exits, and Solana witnessing $0.2 million in outflows.
Crypto funds see largest outflows since March, reflecting market volatility and the impact of recent FOMC meeting.
Crypto Funds Face Massive Outflows Led by Bitcoin
Crypto investment funds saw a substantial $600 million in outflows last week, following a remarkable $2 billion inflow the previous week. This development, as reported by CoinShares, marks the largest outflow since March 22, 2024. Such significant movements in fund flows reflect investor responses to external economic factors. The most recent Federal Open Market Committee (FOMC) meeting, held on June 11-12, 2024, played a key role in influencing investor sentiment, leading many to withdraw their investments from Bitcoin and other digital assets.
Impact of the FOMC Meeting on Crypto Investments
The FOMC’s decision to maintain interest rates at 5.25%-5.50% has prompted a shift in investor behavior. High interest rates generally lead to reduced risk appetite, encouraging investors to move their capital into more stable investment vehicles. This phenomenon was evident last week, as crypto assets, perceived as high-risk, faced significant sell-offs. Bitcoin, being the most prominent digital asset, bore the brunt, contributing to the $600 million in net outflows from crypto funds.
Breakdown of Outflows in Major Cryptocurrencies
Bitcoin funds encountered the most substantial outflows, with around $621 million pulled out. Notably, the majority of these outflows occurred in Spot Bitcoin ETFs that trade within the US market. Data shows that every day of the last week recorded outflows from Spot Bitcoin ETFs, except for a notable $100.8 million inflow on June 12. Despite this brief influx, the total outflows for Spot Bitcoin ETFs amounted to $580 million for the week. In contrast, products designed to short Bitcoin saw minor inflows totaling $1.8 million, reflecting bearish sentiments among investors.
Solana also faced challenges, experiencing outflows of $0.2 million in its investment products. Multi-asset investment vehicles were not spared either, seeing outflows of approximately $1.1 million. This trend significantly impacted trading volumes, which averaged around $11 billion for the week, much lower than the yearly average of $22 billion. Consequently, the total assets under management (AuM) in digital asset funds decreased from over $100 billion to $94 billion.
Positive Movements in Other Crypto Assets
Despite the negative trend in Bitcoin and Solana, Ethereum saw an inflow of $13.1 million, suggesting growing investor interest ahead of the anticipated launch of Spot Ethereum ETFs. Other cryptocurrencies like BNB, Litecoin, XRP, Chainlink, and Cardano also saw positive inflows, with $0.3 million, $0.8 million, $1.1 million, $0.7 million, and $0.8 million respectively. These inflows indicate a selective investor optimism towards certain segments within the digital asset market.
Conclusion
Last week’s outflows from crypto funds underscore the market’s sensitivity to broader economic policies and investor risk appetite. The pronounced outflows following the FOMC meeting highlight the ongoing volatility within the crypto sector. However, the inflows in Ethereum and other altcoins suggest that while investor sentiment towards Bitcoin might be bearish due to current economic conditions, there remains faith in the potential of other digital assets. Moving forward, market participants will likely keep a close watch on macroeconomic developments and regulatory changes that could further influence crypto fund flows.
