Cryptocurrency Investment Products Experience $305 Million Outflow Amid Positive U.S. Economic Indicators
In recent weeks, cryptocurrency investment products experienced a significant shift, transitioning from substantial inflows to considerable outflows amounting to $305 million, as reported by CoinShares in their latest assessment on September 2. This notable change in trend coincides with the release of robust economic data emanating from the United States.
During the week from August 24 to August 31, American investors notably led global trends in crypto product divestments, contributing to total outflows of $318 million. In contrast, Germany and Sweden recorded smaller withdrawals of $7.3 million and $4.3 million, respectively, while Switzerland and Canada experienced moderate inflows of $5.5 million and $13.2 million, respectively.
The significance of U.S. spending data regarding last week’s crypto outflows cannot be understated. The U.S. Commerce Department announced on August 30 that the Personal Consumption Expenditures (PCE) price index increased by 0.2% month-over-month and rose by 2.5% compared to the previous year. As consumer spending is acknowledged as a primary catalyst for economic expansion in the U.S., the PCE is regarded as one of the Federal Reserve’s preferred inflation metrics. Investors appear to be anticipating the Fed’s first interest rate reduction in more than four years, which could be influenced by the PCE report indicating a potential 24 basis point reduction and diminishing the likelihood of a more aggressive 50 basis point cut.
The CoinShares report elaborates that the cryptocurrency market is poised to become increasingly reactive to interest rate expectations as the Federal Reserve nears a policy pivot.
Among various cryptocurrency funds, Bitcoin products experienced the most significant outflows, totaling $319 million last week. Conversely, short Bitcoin investment products recorded inflows for the second consecutive week, achieving a total of $4.4 million, the highest since March 2024. Ethereum-based products did not fare much better, with $5.7 million in outflows, continuing a downward trajectory despite the recent introduction of Ethereum exchange-traded funds (ETFs) in the U.S. on July 23, 2024. Interestingly, blockchain equities defied the general outflow trend, amassing inflows of $11 million, particularly into investments focused on Bitcoin mining.
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