The cryptocurrency market has faced significant challenges since the launch of spot Ether (ETH) exchange-traded funds (ETFs) in the United States on July 23, according to a recent report by Citibank. The report highlights that while other risk assets have also shown weakness during this period, cryptocurrencies have particularly underperformed following the release of non-farm payroll (NFP) data, which temporarily buoyed other markets.
Citi's analysis reveals that demand for digital assets has waned in recent weeks, with both spot Bitcoin (BTC) and Ether ETFs experiencing net outflows over the past month. This decline in interest is further evidenced by relatively low search activity and subdued network engagement. The report also points out that futures funding rates briefly turned negative in August, signalling weaker demand in the market.
The bank suggests that ETF flows are likely to remain underwhelming until there is more clarity on the U.S. economic outlook, particularly regarding the potential for a "soft landing versus hard landing" scenario. Despite the broader market's struggles, stablecoins have defied the trend, with their supply continuing to grow even amid the market correction in August.
