Crypto Investment Products Lost $726M Last Week Amid Rate Cut Uncertainty

According to data from CoinShares, crypto investment products are experiencing a notable shift in investors’ sentiment. During the past trading week, they recorded staggering net outflows of $726 million, the highest outflow seen since March 2024.

Bitcoin (BTC) saw the most outflow for the week, totaling $643 million, while short-bitcoin witnessed minor inflows of $3.9 million. This includes a whooping negative flow of $706 million seen by the 12 US spot Bitcoin ETFs last week.

Inflows Continue to Dry Up

On the other hand, Ethereum saw smaller outflows of $98 million last week, mainly driven by the incumbent Grayscale Trust, while inflow from newly issued ETFs continues to dry up.

However, Solana saw the largest weekly inflows for any asset, totaling $6.2 million.

In terms of regional perspective, the US saw the largest outflows, totalling $721 million, followed by Canada, which saw smaller negative flows of $28 million. In contrast, Germany and Switzerland saw positive flows of $16.3 million and $3.2 million, respectively. This underscores investors’ positive sentiments in European countries.

Rate Cut Uncertainty

Analysts at CoinShares have attributed the negative flows seen in crypto investment products to uncertainty surrounding the Fed rate cut in the coming week.

“We believe this negative sentiment was driven by stronger-than-expected macroeconomic data from the previous week, which increased the likelihood of a 25 basis point (bp) interest rate cut by the US Federal Reserve,” James Butterfill, CoinShares head of research said in the report.

The analyst, however, pointed out that there was a slowdown in daily outflows later in the week as the recently released US employment data fell below expectation—leaving market opinions on a potential 50bp rate cut “highly divided.”

“The markets are now awaiting Tuesday’s Consumer Price Index (CPI) inflation report, with a 50bp cut more likely if inflation comes in below expectations,” he added.

At the time of filing this report, bitcoin was trading at 55,696, representing a 2.46% surge in the past 24 hours. Ether (ETH), on the other hand, trades at $2,314, marking a less than 2% increase on the day.