Last week, there was a total withdrawal of $206 million from global crypto investment products, according to Coinshares’ report, indicating investors’ apprehensions about the potential effects of Federal Reserve’s policy changes on interest rates.
Global Impact Of Crypto Outflows On Bitcoin ETFs And Market Volume
According to a recent report from CoinShares, there was a net withdrawal of $206 million in the past week, making it the second week in a row with outflows. This trend is likely due to investors anticipating that the Federal Reserve will keep interest rates high for an extended timeframe.
Notable outflows occurred in cryptocurrency investment offerings from firms like Ark Invest, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares.
CoinShares Head of Research James Butterfill noted:
Based on the data, it seems that investor interest in ETPs and ETFs related to the ETP (Energy Transfer Partners) or ETF (Exchange-Traded Fund) category is decreasing. This decline may be due to investors’ anticipation that the Federal Reserve will maintain current interest rates for a longer period than initially assumed.
It’s worth noting that the weekly trading volume of Bitcoin through global exchange-traded products amounted to $18 billion, representing 28% of the overall Bitcoin trading activity. This is a drop from the 55% share recorded just a month prior.
In simpler terms, the amount of Bitcoin flowing out of US Bitcoin ETFs each week for the US market totaled $204.3 million, which added up to a substantial outflow of bitcoin on a global scale.
Despite the prevalent increase in Bitcoin ETF investments, BlackRock’s IBIT stood out as the unique destination for consistent weekly Bitcoin ETF inflows. It attracted $165.4 million, extending its uninterrupted run to 69 successive days prior to the Bitcoin Halving event.
On April 20th, I awoke to find that $IBIT had taken in cash for the sixty-ninth consecutive day, an event that coincided with the cryptocurrency’s halving. The timing seemed almost too serendipitous.
— Eric Balchunas (@EricBalchunas) April 20, 2024
Region-Based Crypto Fund Flows And Market Trends
Based on CoinShares’ findings, US investors withdrew a total of $244 million from cryptocurrency investments through futures products last week.
In contrast, funds based in Canada and Switzerland experienced inflows of $30 million and $8 million respectively. A total of $192 million was withdrawn from global Bitcoin funds during the week.
Significantly, short positions on Bitcoin with a relatively small value saw modest withdrawals totaling $300,000 during this period, suggesting that only a few investors opted to short Bitcoin based on Butterfill’s observation.
In addition, Ethereum investment funds experienced their sixth weekly outflow in a row, totaling $34 million. Conversely, Litecoin and Chainlink investment products recorded inflows of $3.2 million and $1.7 million respectively.
In the meantime, there were withdrawals amounting to $9 million from blockchain stocks for the eleventh straight week. According to James Butterfill, such trends persist as investors express concerns about the potential impact of the halving on mining businesses.
In the midst of recent financial transfers, the total crypto market has experienced a slight rise in the last 24 hours. Bitcoin, being the biggest crypto in terms of market value, went up by 1.2%, while Ethereum, the second largest, noted almost a 1% increase during the same timeframe.
The price movement occurred at the same time as Bitcoin undergoing its fourth halving on April 20th. This event resulted in a decrease in the reward given to miners for each new block, changing it from 6.25 Bitcoins to 3.125 Bitcoins.
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2024-04-23 04:12