Digital asset investment products have experienced a staggering $88 million in outflows over the past week, marking the eighth consecutive week of capital flight from cryptocurrency funds. With a combined total of $417 million having been withdrawn throughout this period, the continuance of these outflows aligns with the substantial price declines observed across the crypto market. For instance, Bitcoin (BTC) closed last week at approximately $26,000, a far cry from its peak near $31,000 in mid-April.
The outflows have not spared the two largest cryptocurrencies by market value, with Bitcoin and Ethereum being the most affected. Last week alone, these assets experienced outflows of $52 million and $36 million, respectively. Throughout the eight-week downturn, Bitcoin has lost $254 million in investments. Furthermore, Ethereum endured its largest single week of capital exit since the Merge event last year.
Interestingly, not all cryptocurrencies have faced similar outflows. A few altcoins such as Litecoin, XRP, and Solana have witnessed minor inflows, offering a glimmer of hope within the heavily impacted crypto market.
There are a few factors contributing to the ongoing exodus of investments from cryptocurrency funds. CoinShares opined that monetary policy plays a significant role in driving these outflows, as the lack of a clear end to interest rate hikes has left investors cautious. Regulatory policy has also been a contributing factor, as evidenced by last week’s legal actions against major exchanges Coinbase and Binance by the SEC, which fueled the crypto market’s decline.
However, this week may present a change in focus, with several key macroeconomic data points set to be released. These include Tuesday’s U.S. inflation report and Wednesday’s findings from the latest U.S. Federal Reserve policy meeting. The outcome of these events could potentially overshadow regulatory concerns and influence the trajectory of the cryptocurrency market moving forward.
In conclusion, a confluence of factors such as monetary policy and regulatory actions have created an environment of caution and skepticism, causing an extended period of outflows from digital asset investment products. While some altcoins display resilience, the two largest cryptocurrencies have not been spared from these outflows. The upcoming macroeconomic data releases may offer new insights, shifting the focus from regulatory policy to the broader economic landscape and its implications for the future of the cryptocurrency market.
Source: Coindesk
