Crypto Investment Products Witness $435M Outflow Amid Market Pause, Inflows Expected from Asian Market
Summary:
Cryptocurrency investment products experienced a $435 million outflow in the week ending April 26, making it the third straight week of outflows amid a stagnating Bitcoin price. Both Bitcoin and Ether saw significant withdrawals, while Solana and Litecoin recorded net inflows. Analysts attribute the outflow to investors' fear of US stagflation and convey that the market stagnation is a temporary pause, not a persistent trend. Anticipation surrounds the upcoming launch of HK Bitcoin and Ether spot ETFs, hoping to invite more Asian institutional capital into the market.
In the week ending on April 26, cryptocurrency investment products saw a hefty outflow of $435 million, as pointed out by CoinShares research. This marks the third successive week of outflows for crypto exchange-traded products (ETPs) as Bitcoin hovers in the lower bracket of $60,000.
The largest outflows were noted from Bitcoin (BTC) funds, with a sizeable $423 million exiting the market post-halving. Meanwhile, Ether (ETH) also saw a retreat with $38 million in withdrawals, marking its seventh week in a row of negative cash flow. In contrast, Solana (SOL) and Litecoin (LTC) ETPs recorded inbound funds with net inflows of $4.1 million and $3.1 million, respectively.
CoinShares attributes these outflows to a slowdown in capital injection from new issuers, causing only $126 million of inflows to occur last week, compared to $254 million from the week before. As BlackRock's Bitcoin ETF (IBIT) reported zero flows for the first time over the same week, other issuers have seen several dry days as well, amid declining outflows from Grayscale's GBTC.
Market watchers attribute these outflows to investors' fears about U.S. stagflation, a mix of dormant economic growth rate and high inflation, reducing the chances of rate cuts by the Federal Reserve. According to the CME FedWatch tool, the odds for a rate cut in June are currently at a low 11.3%, with higher probabilities slated for September and November at 44.8% and 43.8%, respectively.
However, analysts at brokerage firm Bernstein denounce this cash flow dip as a temporary pause rather than a downward trend. They maintain their bullish outlook of $150,000 target for Bitcoin by 2025 end, attributing it to an extraordinary ETF demand, which has already accumulated $12 billion of spot Bitcoin ETF net inflows since January 11.
The Ecoinometrics report has cautioned readers to stay vigilant for a swing in financial conditions that could potentially make or break the Bitcoin bull run. They have noted that although spot Bitcoin ETFs have brought new demand in the market, the Federal Reserve's failure to tackle inflation can possibly rock the bullish market. The report has stated that this failure might cause a tightening of financial conditions and subsequently pose a challenge to bull run.
In a glance at the National Financial Conditions Index by the Federal Reserve Bank of Chicago, Ecoinometrics notes that the Bitcoin bull market might get shaky if the NFCI holds its current position. However, there is optimism surrounding the launch of HK Bitcoin and Ether spot ETFs next week, which could serve as a portal for an influx of Asian institutional capital. Always remember that every investment and trading move involves risk, thus it is essential to conduct thorough research before making any decisions.
Published At
4/29/2024 11:23:00 PM
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