Digital asset investment products experienced significant outflows last week, totaling $305 million, as negative sentiment spread across various providers and regions. This trend is believed to be driven by stronger-than-expected economic data in the United States, which has reduced the likelihood of a 50-basis point interest rate cut. Market analysts suggest that digital assets are becoming increasingly sensitive to interest rate expectations as the Federal Reserve nears a potential policy pivot.
According to Coinshares, the United States led the outflows, with a total of $318 million, reflecting the widespread cautious sentiment among investors. In Europe, Germany and Sweden also saw outflows, albeit smaller, amounting to $7.3 million and $4.3 million, respectively. Conversely, Switzerland and Canada recorded minor inflows of $5.5 million and $13.2 million, suggesting some regional variances in investor outlook.
Among the investment product providers, iShares ETFs in the USA saw the most significant weekly inflow of $219 million, indicating continued interest in certain ETFs. However, Grayscale Investments reported substantial outflows of $143 million for the week, contributing to a month-to-date (MTD) outflow of $1,451 million and a year-to-date (YTD) outflow of $19,000 million. Other notable outflows came from ARK 21 Shares/USA, with $221 million, and Fidelity ETFs/USA, which saw $63 million in weekly outflows.
Bitcoin and Ethereum Under Pressure
Bitcoin investment products faced the brunt of the outflows, losing $319 million in the past week, underscoring the dominant negative sentiment around the leading cryptocurrency. Short Bitcoin investment products, however, recorded their second consecutive week of inflows, amounting to $4.4 million—the highest level since March of this year. This indicates a shift in investor strategy towards hedging or betting against Bitcoin’s price performance.
Ethereum also saw a modest outflow of $5.7 million. Trading volumes for Ethereum products remained stagnant, achieving only 15% of the levels seen during the US ETF launch week, comparable to volumes before the launches. This suggests a lack of renewed investor enthusiasm or significant new interest in Ethereum products at current market conditions.
While the general trend was negative, Solana bucked the trend by attracting $7.6 million in inflows. This marks a notable divergence from the outflows experienced by other major digital assets and suggests growing interest or confidence in Solana’s unique position within the blockchain ecosystem. Blockchain equities also defied the broader outflow trend, registering $11 million in inflows. A significant portion of these inflows was directed towards Bitcoin miner-specific investment products, indicating investor interest in companies directly involved in cryptocurrency mining operations.
