Bitcoin Outflows Reach $305 Million Amid Impact of Strong US Economic Data on Cryptocurrency Market
Crypto investment products experienced significant outflows amounting to $305 million last week, as negative sentiment permeated various providers and regions, according to the most recent weekly report from CoinShares.
James Butterfill, the head of research at CoinShares, attributed these outflows to robust US economic data, which he stated “diminished the likelihood of a 50-basis point interest rate cut.” Butterfill also mentioned the increasing sensitivity of the asset class to interest rate expectations as the Federal Reserve moves closer to a pivot.
Bitcoin bore the brunt of these outflows, with asset managers such as Grayscale, ProShares, and 21Shares reporting net losses. The leading cryptocurrency saw $319 million in outflows, while the United States witnessed slightly lower total outflows of $318 million. In contrast, short Bitcoin investment products attracted significant inflows, reaching $4.4 million for the second consecutive week.
Similarly, Ethereum faced outflows amounting to $5.7 million, with trading volumes remaining stagnant at just 15% of those observed during the US ETF launch week. Galaxy Digital highlighted the considerably lower trading volumes of Ethereum ETFs compared to Bitcoin ETFs, partly due to prime trading desks not yet providing margin on Ethereum ETFs.
Solana, however, defied the overall negative market trend by attracting $7.6 million in inflows. Additionally, blockchain equities experienced positive momentum, with $11 million flowing into products focused on Bitcoin miners. This surge in miner investments coincides with their exploration of new avenues to leverage BTC mining equipment by providing computational power to artificial intelligence (AI) companies.
VanEck projects that if Bitcoin miners allocate 20% of their energy capacity to AI computation by 2027, they could potentially boost their average yearly profits to nearly $14 billion.
In conclusion, the crypto market witnessed significant outflows in investment products, particularly affecting Bitcoin and Ethereum. Despite these challenges, Solana and blockchain equities managed to attract substantial inflows, showcasing resilience and potential growth opportunities within the industry.
