Crypto investment products see outflows for second consecutive week — CoinShares

Investments in digital asset funds have declined for the second consecutive week, with $206 million in withdrawals between April 15-19, according to data from digital asset investment firm CoinShares.

Bitcoin (BTC) funds led outflows over the past week, with $192 million exiting the market ahead of the halving event. Ether (ETH) investment products also experienced outflows of $34 million, marking their sixth consecutive week of negative flow.

Investment in blockchain equities has also been declining, with the sector recording its 11th consecutive week of outflows, totaling $9 million.

According to CoinShares, the downtrend is likely a result of investors’ concerns about rising interest rates in the United States, which can make less risky financial instruments more attractive compared to volatile assets such as cryptocurrencies.

The Federal Reserve anticipated easing its monetary policy in mid-2024 if economic conditions aligned, but recent inflation data have dampened those hopes. The annual Consumer Price Index in March increased by 3.5%, exceeding expectations for the third consecutive month and indicating that lower rates may not become a reality until 2025. The federal funds rate currently sits between 5.25% and 5.50%.

“The data suggests appetite from ETP/ETF investors continues to wane, likely off the back of expectations that the FED is likely to keep interest rates at these high levels for longer than expected.”

Trading volume for Bitcoin exchange-traded funds (ETFs) declined slightly to $18 billion over the week. Bitcoin fund outflows, however, were not seen as an opportunity to short the cryptocurrency. According to CoinShares, the trend indicates that while investors are stepping away from volatility, they are not necessarily expecting Bitcoin price to crash anytime soon.

“These volumes represent a lower percentage of total Bitcoin volumes (which continue to rise) at 28%, compared to 55% a month ago,” the report said.

Inflows into Bitcoin ETFs have significantly slowed since their peak in March. Meanwhile, BlackRock’s iShares Bitcoin Trust (IBIT), the largest ETF in terms of assets managed, maintained a steady level of investor interest this month, drawing $1.4 billion in positive flows as of April 19.

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