Crypto ETFs experienced $600 million in outflows, with Bitcoin funds losing $621 million.
Ether and some altcoins showed resilience, attracting modest inflows.
AI-linked tokens like FET and RNDR declined up to 30% as Google search interest peaked.
Digital asset investment products suffered their largest weekly outflow since March, shedding $600 million, as investors reacted to the Federal Reserve’s hawkish stance on interest rates.
This marks the largest outflow since March 22, as reported by CoinShares on June 17. The “Weekly Asset Fund Flows” report revealed that the outflows were predominantly from Bitcoin investment vehicles, which recorded an exodus of $621 million. Short Bitcoin funds, in contrast, experienced modest inflows of $1.8 million.
📊 Digital asset investment products experienced US$600 million outflows, the largest since March 22, likely due to a more hawkish-than-expected FOMC meeting, prompting investors to scale back their exposure to fixed-supply assets.More insights: https://t.co/IMk6laYOQb pic.twitter.com/qeB69qOhgT
— CoinShares (@CoinSharesCo) June 17, 2024
The report attributed this capital flight to a more hawkish-than-expected stance from the Federal Reserve, which indicated the likelihood of maintaining high-interest rates. This outlook prompted investors to withdraw from fixed-supply assets like Bitcoin.
Despite the bleak scenario for Bitcoin, several altcoins showed resilience. Ether investment vehicles attracted $13.2 million in inflows. Additionally, LIDO and XRP investment products saw inflows of $2 million and $1.1 million, respectively.
BNB, Litecoin, Cardano, and Chainlink, among other altcoins, saw modest increases in investments for the week. However, these gains did not offset the overall decrease, resulting in a decline in total digital assets under management.
The introduction of Bitcoin exchange-traded funds (ETFs) in the United States initially caused excitement. However, experts believe that institutional participation is nascent. Franklin Templeton CEO Jenny Johnson said that institutional adoption is still in its infancy and expects a stronger wave of institutional interest and capital inflow in the future.
At the same time, AI-linked crypto assets saw their market value fall over the past week. Tokens such as FET, RNDR, TAO, and GRT experienced market value declines of up to 30%, according to data. This drop coincided with a peak in Google Search interest in “artificial intelligence,” suggesting a pattern where spikes in search queries align with market tops.
The excitement about artificial intelligence had reached its peak with an increasing number of retail investors searching for information about AI and companies like Nvidia (NVDA), a key player within the AI sector.
It is noteworthy that in late 2022, Bitcoin, which has a strong positive correlation with Nvidia, reached a low point alongside technology stocks. This period followed the debut of ChatGPT, which raised general awareness about artificial intelligence. GMO’s Chief Investment Strategist Jeremy Grantham noted that the AI rally could represent a bubble within a bubble, potentially leading to a market correction.
The cryptocurrency market is undergoing transformation due to economic factors and shifting investor interests. While Bitcoin and AI-related tokens face challenges, some altcoins continue to attract investor attention, demonstrating the evolving digital asset landscape.
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