Crypto Investment Funds Witness $435M Outflow Amidst Rising Inflation Concerns

    Cryptocurrency investment funds witness significant outflows amidst concerns over rising inflation, prompting analysts to reassess market trends and anticipate potential catalysts for future growth.

    • Weekly outflow of $435 million from cryptocurrency investment products highlighted by CoinShares.
    • Bitcoin funds lead outflows, with $423 million exiting the market after the halving event.
    • Deceleration in inflows from new issuers contributes to negative outflows, with only $126 million in inflows last week.
    • Analysts at Bernstein anticipate a short-term pause in Bitcoin ETF inflows before resuming the bull run.
    • Ecoinometrics warns of potential trouble for the Bitcoin bull market due to macroeconomic factors and Federal Reserve policy.
    • The Federal Reserve Bank of Chicago’s National Financial Conditions Index (NFCI) is stalling, posing a possible threat to risk assets like Bitcoin.
    • Asian institutional capital may flow into the market with the introduction of HK BTC and ETH spot ETFs.

    Cryptocurrency Outflows Amidst Market Stagnation

    CoinShares’ recent report sheds light on the continuous outflow of funds from cryptocurrency investment products, totaling $435 million in the week ending April 26. Bitcoin, the market leader, experienced a significant withdrawal of $423 million, coinciding with a period of stagnation in its price around the $60,000 mark. Ethereum also faced negative flows for the seventh consecutive week, with $38 million exiting the market.

    The dwindling inflows from new issuers, dropping to $126 million compared to $254 million the previous week, contribute to this trend. Notably, BlackRock’s Bitcoin ETF, IBIT, recorded zero flows for the first time, indicative of a broader slowdown in investor interest, possibly influenced by concerns about U.S. stagflation.

    Analysts’ Perspectives on Market Trends

    Despite the short-term setback, analysts at Bernstein remain optimistic about Bitcoin’s long-term trajectory. They view the current slowdown in ETF inflows as a temporary pause, anticipating increased integration with private bank platforms and brokerage platforms. Their bullish outlook is supported by expectations of a $150,000 cycle target for Bitcoin by 2025, fueled by unprecedented ETF demand since their market debut.

    However, Ecoinometrics warns of potential headwinds for the bull market, citing macroeconomic indicators and Federal Reserve policy. The stalling National Financial Conditions Index (NFCI) poses a significant concern, as it indicates a potential pivot in financial conditions that could adversely affect risk assets like Bitcoin.

    Future Prospects and Catalysts

    Despite the cautious outlook, there are potential catalysts on the horizon. The introduction of HK BTC and ETH spot ETFs could attract Asian institutional capital into the market, providing a boost to investor sentiment and potentially reversing the current outflow trend.ش

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