Crypto investment funds see $435M outflow as bull market stalls amid rising inflation concerns

Reporting from CoinShares highlighted a weekly $435 million outflow from cryptocurrency investment products in the week ending April 26. Crypto exchange-traded products (ETPs) have now experienced outflows for the third consecutive week as Bitcoin price remains rangebound in the low $60,000 range.

Source: CoinShares

Bitcoin (BTC) funds led outflows, with $423 million exiting the market after the halving event, while Ether (ETH) investment products also experienced withdrawals of $38 million, marking their seventh consecutive week of negative flow. Solana (SOL) and Litecoin (LTC) ETPs experienced deposits, posting net inflows of $4.1 million and $3.1 million, respectively.

Flows into crypto investment products. Source: CoinShares

According to CoinShares, the negative outflows are likely due to “deceleration in inflows from new issuers,” which saw only $126 million in inflows last week, compared to $254 million the week prior.

Data from Farside Investors reveals that BlackRock’s Bitcoin ETF, IBIT, recorded “zero flows” for the first time last week. The other issuers have experienced various days of zero inflows over the last few weeks amid decelerating outflows from Grayscale’s GBTC.

Bitcoin ETF flows table. Source: Farside Investors

The negative outflows are likely a result of investors’ concerns about U.S. stagflation – a combination of slower economic growth rate and sticky inflation, further weakening the probability of the Fed rate cuts.

According to the CME FedWatch tool, traders are placing the odds of a June rate cut at just 11.3% at the time of writing versus 44.8% for September and 43.8% for November. This means market analysts are betting that the U.S. Federal Reserve will hold rates steady in May and June, with the first possible cut being later in the year.

Target rate probabilities for June 12, 2024 Fed meeting. Source: CME

Bitcoin bull run experiencing a “short-term pause”

Analysts at brokerage firm Bernstein say that the slowdown in spot Bitcoin ETF inflows is not the beginning of a negative trend but is a “short-term pause” before BTC resumes its bull run.

In a note to clients,…

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