Recent data from CoinShares reveals that crypto funds experienced significant outflows last week, marking a stark contrast to the five consecutive weeks of inflows that preceded it. The net outflows totaling $600 million were primarily concentrated in Bitcoin and Solana funds, with Bitcoin alone seeing $621 million in exits. These outflows coincide with a decline in the price of Bitcoin and a more hawkish stance taken by the Federal Open Market Committee (FOMC) during their recent meeting.
The $600 million outflow recorded is the largest since March 22, 2024, mirroring a similar situation where substantial inflows were followed by a significant withdrawal of funds. In both instances, investors reacted to external factors such as the outcome of the FOMC meeting, which led to a shift towards more stable assets. The FOMC’s decision to maintain interest rates at 5.25%-5.50% prompted many investors to reallocate their investments.
Unsurprisingly, the majority of outflows came from Bitcoin, with $621 million exiting crypto funds tied to the leading cryptocurrency. Spot Bitcoin ETFs in the US saw consistent outflows throughout the week, with only one day showing a minor inflow. As a result, these ETFs collectively recorded $580 million in outflows. Conversely, short Bitcoin products received $1.8 million in inflows, indicating a bearish sentiment among investors.
Solana, which experienced price volatility during the week, also saw $0.2 million in outflows from its investment products. Additionally, multi-asset investment products witnessed outflows amounting to $1.1 million. The overall trading volume for the week was significantly reduced, dropping from the yearly average of $22 billion to $11 billion. Consequently, total assets under management (AuM) decreased from over $100 billion to $94 billion.
While Ethereum registered $13.1 million in outflows, investor interest remained high due to the anticipation surrounding the launch of Spot Ethereum ETFs. On the other hand, altcoins like BNB, Litecoin, XRP, Chainlink, and Cardano saw modest inflows ranging from $0.3 million to $1.1 million. These selective inflows suggest that investors are diversifying their portfolios amidst market uncertainty and changing dynamics.
The recent outflows in crypto funds reflect a shift in investor sentiment driven by external events such as the FOMC meeting and price fluctuations in leading cryptocurrencies. The dominance of Bitcoin in the outflows indicates a cautious approach by investors, while the influx of funds into select altcoins points towards a strategic repositioning of portfolios. As the market continues to evolve, adaptability and risk management will be essential for investors navigating the volatile landscape of crypto investments.