The Federal Reserve’s hawkish stance last week has seemingly lowered institutional investors’ confidence in the markets, as total outflows across all crypto exchange-traded products (ETPs) last week stood at $600 million. That makes last week the worst for crypto ETP—including ETF—outflows since March.
Investors appear to have lost confidence because of the dot plot—a collection of forecasts by the Fed presidents and governors. The plot now indicates that the Federal Reserve anticipates only one rate cut in 2024, not three as was forecast at the start of the year, according to the report.
High interest rates are detrimental to risk assets like cryptocurrencies and equities, as fixed-income, yield-bearing assets like treasuries provide investors a place to safely store their funds.
Bitcoin ETFs in particular saw net outflows of $621 million, while Ethereum, XRP, and Lido ETPs saw net inflows of $15 million, $2 million, and $1 million, respectively.
Overall, it’s a huge drop from the more than $2 billion worth of inflows seen the previous week. That was the best week for crypto ETP flows since March, and now it’s immediately followed by the worst during the same span.
Exchange-traded products (ETPs) are a broad umbrella that encompasses exchange-traded funds (ETFs) and exchange-traded notes (ETNs). ETFs are widely popular in both the cryptocurrency markets and traditional financial markets.
U.S. ETPs saw the highest net outflows of $565 million, while Germany bucked the trend with $17 million of net inflows.
Grayscale’s GBTC fund saw the highest outflow of $274 million, while Ark Invest and 21Shares’ ARKB fund witnessed an outflow of nearly $150 million.
BlackRock’s IBIT fund saw the highest inflow of $41.6 million. ProShares’ EETH fund, which invests in Ethereum futures, saw the second-highest inflow at $16.85 million.
Just last week, Bitcoin and the broader crypto ecosystem witnessed increased volatility. The price of assets rose after a better-than-expected Consumer Price Index (CPI), however the rally was short-lived as Fed Chair Jerome Powell’s hawkish commentary eroded the gains in the span of hours.
But outflows and at-times volatile prices have been used by some as an opportunity to buy Bitcoin while it’s “on sale.”
MicroStrategy, which planned on raising $500 million worth of unsecured senior convertible notes on June 13, announced on Friday that it has increased its raise to as much as $786 million. The funds will largely be used to buy Bitcoin.
Meanwhile, global investment firm Bernstein raised its 2025 price target for Bitcoin to $200,000 from $150,000.
Edited by Andrew Hayward
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
