CoinShares reported a significant outflow of $435 million from cryptocurrency investment products in the week ending April 26. This marks the third consecutive week of outflows for crypto exchange-traded products (ETPs), as the price of Bitcoin remains stagnant in the low $60,000 range.
Bitcoin funds saw the largest outflows, with $423 million leaving the market after the halving event. Ether investment products also experienced withdrawals of $38 million, continuing their seven-week streak of negative flow. However, Solana and Litecoin ETPs saw deposits, with net inflows of $4.1 million and $3.1 million, respectively.
The decrease in inflows from new issuers is likely the cause of the negative outflows, with only $126 million coming in last week compared to $254 million the previous week, according to CoinShares.
Data from Farside Investors reveals that BlackRock’s Bitcoin ETF, IBIT, had “zero flows” for the first time last week. Other issuers have also experienced periods of zero inflows in recent weeks, as outflows from Grayscale’s GBTC decelerate.
The negative outflows can be attributed to investors’ concerns about U.S. stagflation, a combination of slower economic growth and persistent inflation. This has further reduced the likelihood of rate cuts by the U.S. Federal Reserve. According to the CME FedWatch tool, traders currently place the odds of a June rate cut at only 11.3%, compared to 44.8% for September and 43.8% for November.
Despite the slowdown in spot Bitcoin ETF inflows, analysts at brokerage firm Bernstein believe it is just a “short-term pause” and not the beginning of a negative trend. They maintain their target of $150,000 for the Bitcoin price by the end of 2025, citing strong ETF demand.
However, a new report by Ecoinometrics warns readers to watch out for a potential shift in financial conditions that could impact the Bitcoin bull market. The Federal Reserve Bank of Chicago’s National Financial Conditions Index (NFCI) is stalling, at the same level it was in 2022 when interest rates started to rise. This could have a bearish effect on risk assets like Bitcoin.
Overall, market analysts are eagerly awaiting the launch of the HK BTC and ETH spot ETFs, as they could potentially attract significant institutional capital from Asia. It remains to be seen how these developments will impact the cryptocurrency market.
Please note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment decisions.