As an analyst with over two decades of market experience under my belt, I find myself intrigued by the current state of the crypto market. The recent data from CoinShares paints a picture that is, to put it mildly, quite interesting.
Based on information from CoinShares, there’s been a significant change in investor attitudes towards cryptocurrencies. In fact, during the recent trading week, they noted a massive withdrawal of funds amounting to $726 million, which is the largest outflow since March 2024.
As a crypto investor, I observed that Bitcoin (BTC) experienced an outflow of approximately $643 million during the past week, while there were minimal inflows of around $3.9 million for short-Bitcoin. Interestingly, the 12 U.S. spot Bitcoin ETFs collectively witnessed a significant outflow amounting to $706 million last week.
Inflows Continue to Dry Up
Conversely, Ethereum experienced withdrawals amounting to approximately $98 million during the previous week, primarily due to transactions from the existing Grayscale Trust. Meanwhile, inflows from newly launched ETFs have slowed significantly.
However, Solana saw the largest weekly inflows for any asset, totaling $6.2 million.
From a geographical point of view, the United States experienced the greatest withdrawals amounting to approximately $721 million, while Canada had smaller outflows worth around $28 million. On the flip side, Germany and Switzerland recorded positive investments of about $16.3 million and $3.2 million respectively. This trend suggests that investors have a favorable view towards European nations.
Rate Cut Uncertainty
Experts from CoinShares believe that the decrease in investments in cryptocurrency products can be linked to uncertainties about the potential interest rate adjustments by the Federal Reserve during the upcoming week.
According to James Butterfill, CoinShares’ head of research, it appears that the negative sentiment was fueled by unexpectedly robust economic data from the past week. This strong data boosted the possibility that the US Federal Reserve would lower interest rates by 25 basis points.
Despite a noticeable deceleration in the daily withdrawals towards the end of the week, triggered by the underperforming U.S. employment figures that didn’t meet expectations, there’s significant disagreement among market analysts regarding the likelihood of a 50bp interest rate reduction.
Right now, the markets are eagerly waiting for the release of the Consumer Price Index (CPI) inflation report on Tuesday. If the inflation rate turns out to be lower than anticipated, there’s a higher chance that interest rates could decrease by 0.5 percentage points.
As I submit this report, Bitcoin is being exchanged at approximately $55,696, showing a 2.46% rise over the past 24 hours. In contrast, Ether (ETH) currently stands at around $2,314, exhibiting a minimal increase of nearly 2% on the day.
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2024-09-09 18:50