Digital asset manager CoinShares reported last week that institutional investors withdrew hundreds of millions of dollars from digital asset products. This significant outflow highlights a shift in market sentiment influenced by recent macroeconomic data.
Why Are Investors Withdrawing?
According to the latest Digital Asset Fund Flows report from CoinShares, institutional crypto investment products saw a withdrawal of $726 million in just one week. This matches the largest amount recorded in March. CoinShares attributes this negative sentiment to stronger-than-expected macroeconomic data announced the previous week, which increased the likelihood of a 25 basis point interest rate cut by the US Federal Reserve.
How Are Withdrawals Distributed?
The US was hit hardest with $721 million in withdrawals, while Canada saw a withdrawal of $28 million. Contrarily, Germany and Switzerland recorded inflows of $16.3 million and $3.2 million, respectively. Bitcoin investment products suffered the most with $643 million withdrawn, followed by Ethereum with nearly $100 million in outflows, mostly due to the Grayscale Trust.
Key Insights and Conclusions
Analyzing the data reveals key insights:
- US and Canada regions faced significant outflows.
- Germany and Switzerland saw modest inflows, providing a balancing effect.
- Bitcoin and Ethereum experienced the largest withdrawals.
- Solana stood out positively with an inflow of $6.2 million.
The decline in weekly fund flows occurred alongside employment data failing to meet expectations, leading to a market split regarding a 50 basis point interest rate cut. Markets are now focused on the upcoming Consumer Price Index (CPI) inflation report. If inflation comes in lower than expected, a 50 basis point interest rate cut could become more likely.
While substantial outflows were noted in the US and Canada, the inflows from Germany and Switzerland offered some respite. Major digital assets like Bitcoin and Ethereum faced significant withdrawals, whereas Solana emerged as a rare positive performer during this turbulent period.