Interest rate hike speculation triggers outflows from crypto investment products: Report

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On May 2, European cryptocurrency investment firm CoinShares published its latest “Digital Asset Fund Flows Weekly Report,” which stated that the digital asset market experienced bearish sentiment for the second consecutive week, resulting in outflows totaling $72 million. The report noted that the bearish sentiment could be attributed to the probability of further interest rate hikes by the United States Federal Reserve this week.

Weekly crypto asset flows. Source: CoinShares

According to the report, crypto market funds experienced outflows across all geographies and providers, particularly in Germany and Canada, where outflows reached $40 million and $14 million, respectively.

Bitcoin (BTC) recorded the largest outflows at $46 million, with short-Bitcoin also experiencing outflows of $7.8 million, its highest figure since December 2022. Despite the recent outflows, short-Bitcoin continues to lead in inflows for the year, with net inflows of $119 million. Meanwhile, Ether (ETH) products saw outflows amounting to $19 million, marking the biggest weekly outflows since the Merge in September 2022.

On a positive note, a small number of altcoin funds experienced minor inflows, with Solana (SOL), Algorand (ALGO) and Polygon (MATIC) each gaining less than $1 million in capital flows. 

Blockchain equities also experienced negative sentiment, resulting in outflows of $2.5 million last week, although the year-to-date net flows remain positive at $27 million.

CoinShares researcher James Butterfill authored the report. He wrote, “Volumes remain subdued for the broader crypto market (50% less than year average) while ETP [exchange-traded products] investment product volumes at US$1.7bn for the week are 16% above the year average.”

Related: BTC price may need a $24.4K dip as Bitcoin speculators stay in profit

Although Bitcoin has experienced significant price fluctuations over the past week, resulting in $340 million worth of leveraged BTC futures contract liquidations, the BTC price has increased 72% this year, outperforming the S&P 500 index’s 9% gain. 

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