The price potential of Bitcoin is limited as investor risk appetite falls. Last week, digital asset investment products saw outflows amounting to $600 million, reaching levels that were last observed on March 22.
Analysts attribute this to the unusually assertive position taken by the Federal Open Market Committee (FOMC). The increase in withdrawals occurred after the FOMC meeting, with Bitcoin alone representing $621 million. Ethereum and Ripple, two popular altcoins, experienced inflows of $13 million and $1 million, respectively.
The adverse outflows were ascribed to the Federal Reserve’s more hawkish position in the recent Federal Open Market Committee (FOMC) meeting. Following a favorable response to the more moderate US Consumer Price Index (CPI) on June 12, market sentiment changed as the Federal Reserve suggested a less accommodating policy outlook.
The revised dot plot indicates a recommendation for a single interest rate reduction for the year, a decrease from the previous projection of three cuts. For a significant number of individuals, a decrease in the number of interest rate reductions is unfavorable for cryptocurrencies.
From a geographical standpoint, the United States experienced the largest amount of outflows, reaching a total of $565 million. Canada, Switzerland, and Sweden experienced capital outflows of $15 million, $24 million, and $15 million, respectively.
Ethereum experienced a net inflow of $13 million, suggesting a positive and optimistic market sentiment. There is anticipation that Ethereum spot exchange-traded funds (ETFs) will be launched in the near future.
According to Bloomberg analyst Eric Balchunas, the spot Ether ETF is anticipated to be launched on July 2. This prediction is based on the assurance by US Securities and Exchange Commission Chair Gary Gensler that ETH spot ETFs will be launched “during the summer.”
The significant increase in outflows of crypto investments last week demonstrates the influence of macroeconomic measures on digital assets and underscores the susceptibility of crypto investments to fluctuations in monetary policy.
Bitcoin encounters obstacles as a result of its prevailing position and susceptibility to macroeconomic influences, but alternative cryptocurrencies reap advantages from distinct optimistic aspects such as forthcoming ETF introductions.
