Digital asset investment products are experiencing a downturn, with outflows totaling 726 million USD in the past week. According to a recent report from CoinShares, this is equivalent to the record outflow recorded in March of this year.
According to the analysis, this movement is linked to speculation last week that the Federal Reserve (Fed) would cut interest rates. Due to the underperformance in some sectors, the market has created an expectation of a cut ranging from 50 basis points to 25 basis points. The decision is expected to come on the 18th of this month.
Employment data falls short of expectations
Market sentiment showed some signs of stabilization late last week when jobs data came in below expectations.
As a result, this has eased some concerns. What has emerged is a split outlook on the Fed’s next steps, with questions about whether the bank could set a cut in interest rates of more than 50 basis points.
At the moment, everyone is keeping an eye on the launch of the Consumer Price Index, a report on inflation in the country, scheduled for release this Tuesday (10/09).
If inflation is lower than expected, a 50 basis point cut is likely. This could then have a larger impact on the crypto sector. This is because recent outflows from digital assets have been largely concentrated in the United States. Canada has also seen significant outflows.
On the other hand, the European market showed a more positive sentiment, with inflows in some regions. For example, Germany led with inflows equivalent to 16.3 million USD, while Switzerland came next with 3.2 million USD.
Bitcoin and Ethereum lead outflow volume
Bitcoin saw 643 million USD in outflows. On the other hand, Bitcoin shorts saw fewer outflows, totaling 3.9 million USD. In other words, this indicates that some investors are still hedging against further price drops in the flagship cryptocurrency.
Meanwhile, Ethereum saw 98 million USD in outflows, most of which came from the Grayscale Ethereum Trust, a strong name in the market.
Meanwhile, inflows into Ethereum-based ETFs have largely stagnated, a sign that investor confidence in Ethereum may be waning — at least for now. In addition, VanEck announced that its Ethereum futures-focused ETF would be closed, with the final transaction expected on the 16th of this month.
Solana suffers less impact
Amid so many outflows in the crypto investment space, Solana saw the smallest withdrawals of any asset during this period, totaling $6.2 million. QCP Capital said the crypto market has seen some stability following last week’s price swings. However, it suggested volatility remains high.
At the same time, there is optimism on some other fronts. Many institutions, for example, have taken advantage of the recent market slowdown to carry out large long-term trades.
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