Crypto funds have been on a rollercoaster ride in recent weeks, with a record-breaking five weeks of consecutive inflows followed by a sudden shift to outflows. According to data from CoinShares, digital asset funds saw a staggering $600 million in net outflows for the week ending June 14. These outflows were primarily concentrated in Bitcoin and Solana funds, with $621 million and $0.2 million exiting respectively.
This sudden shift in investor sentiment comes amidst a corresponding drop in the price of Bitcoin throughout the week and a more hawkish-than-expected Federal Open Market Committee (FOMC) meeting held during the week. The FOMC, which sets interest rates for the US, held its most recent meeting on June 11 and 12, 2024, and decided to keep interest rates at 5.25%-5.50%. This decision led many crypto investors to pull out of their positions, as crypto is seen as a risky and speculative asset. With the high interest rates, it is only natural for investors to move into safer havens.
The $600 million outflow recorded last week is the largest since March 22, 2024, and it occurred under similar circumstances. In March, the outflow came after a period of significant inflows totaling $3 billion in the week prior. This shows that investors are quick to react to market conditions and adjust their positions accordingly.
Unsurprisingly, the majority of the outflows came from Bitcoin, with crypto funds of the leading asset losing emboîture $621 million. This was mainly seen in Spot Bitcoin ETFs trading in the US, which witnessed outflows every day last week, except for a $100.8 million inflow on June 12. As a result, these Bitcoin ETFs registered a total of $580 million in outflows last week. The negative sentiment towards Bitcoin was also reflected in short Bitcoin products receiving $1.8 million worth of inflows.
Solana, which also had a rough week in terms of price action, recorded $0.2 million of outflows in its investment products. In addition, multi-asset investment products experienced outflows amounting to $1.1 million. This shows that investors are not only pulling out of Bitcoin but also diversifying their portfolios.
The trading tonnage for the week averaged around $11 billion, well below the $22 billion weekly average for the year. This decrease in trading tonnage can be attributed to the outflows and the overall market sentiment. As a result, the total assets under direction (AuM) for crypto funds fell from over $100 billion to $94 billion over the week.
On the other hand, Ethereum received $13.1 million in outflows as investor interest continued to grow in anticipation of the launch of Spot Ethereum ETFs. This shows that investors are still bullish on Ethereum and are eagerly awaiting the launch of these ETFs.
Other altcoins also saw inflows, with BNB, Litecoin, XRP, Chainlink, and Cardano receiving $0.3 million, $0.8 million, $1.1 million, $0.7 million, and $0.8 million respectively. This shows that investors are still interested in diversifying their portfolios and are looking beyond Bitcoin.
Despite the outflows and the drop in trading tonnage, the overall sentiment towards crypto remains positive. The recent outflows can be seen as a temporary setback, and many investors are still optimistic emboîture the future of digital assets. As the market continues to mature and regulations become clearer, we can expect to see more stability and growth in the crypto space.
In conclusion, the recent outflows in crypto funds may have caused some concern, but it is important to remember that this is a volatile market and fluctuations are to be expected. The $600 million outflow may be the largest since March, but it is still a small percentage of the total assets under direction. With the launch of new ETFs and the growing interest in altcoins, the future of crypto remains bright.
