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Bitcoin funds experienced significant outflows in the past week, with $192 million leaving the market in anticipation of the upcoming halving event. Digital asset investments have seen a decrease for the second week in a row, with a total of $206 million withdrawn between April 15-19, according to data from CoinShares.
Bitcoin funds saw substantial outflows, with $192 million exiting the market ahead of the halving event. Ether investment products also faced outflows of $34 million, marking six straight weeks of negative flow.
Blockchain equity investments have also declined, recording their 11th consecutive week of outflows, totaling $9 million. CoinShares attributes the downtrend to investors’ concerns about rising interest rates in the US, which could make less risky financial instruments more appealing than the volatility of cryptocurrencies.
The Federal Reserve anticipated a potential easing of its monetary policy in mid-2024 if economic conditions allowed, but recent inflation data has cast doubt on those prospects.
The annual Consumer Price Index in March rose by 3.5%, exceeding expectations for the third consecutive month and suggesting lower rates may not arrive until 2025. The federal funds rate currently ranges from 5.25% to 5.50%.
“The data suggests waning interest from ETP/ETF investors, likely due to expectations that the Fed will maintain higher interest rates for longer than anticipated.”
Trading volume for Bitcoin ETFs saw a slight decline, reaching $18 billion over the week. Despite the outflows from Bitcoin funds, there was no trend indicating an opportunity to short the cryptocurrency.
CoinShares notes that while investors are pulling back from volatility, they are not necessarily predicting a significant drop in Bitcoin’s price.
“These volumes represent a lower percentage of total Bitcoin volumes, which continue to increase, at 28%, compared to 55% a month ago,” the report stated.
Bitcoin ETF inflows have significantly slowed since their peak in March. However, BlackRock’s iShares Bitcoin Trust (IBIT), the largest ETF by assets managed, continued to see steady investor interest this month, attracting $1.4 billion in positive flows as of April 19.