Almost $100M exits US crypto funds in anticipation of hawkish monetary policy

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According to CoinShares, institutional investors unloaded $101.5 million worth of digital asset products last week from the US Federal Reserve in ‘anticipation of hawkish monetary policy’.

US inflation hit 8.6% year-on-year in late May, marking a return to levels not seen since 1981. As a result, the market is expecting considerable Fed action to reel in inflation, with some traders pricing in. Three more 0.5% rate hikes by October.

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According to the latest edition of CoinShares’ weekly Digital Asset Fund Flow Report, between June 6 and June 10, outflows were made mainly by US investors for $98 million, while Europe contributed only $2 million.

Almost all outflows of products exposed to crypto’s top two assets, Bitcoin (BTC) and Ethereum (ETH), accounted for $56.8 million and $40.7 million per piece. The month-to-month figures also paint a grim figure of $91.1 million worth of outflows for BTC products and $72.3 million in total outflows for ETH products.

“What pushed bitcoin into a “crypto winter” over the past six months can be explained as a direct result of the US Federal Reserve’s increasingly bullish rhetoric.

While CoinShares suggested that bitcoin has been pushed into a crypto winter, the year-on-year (YTD) inflows to BTC investment products still stand at $450.8 million. In comparison, funds offering investments in ETH have seen a massive YTD outflow of $386.5 million, indicating that sentiment among institutional investors is still in favor of digital gold.

The report also noted that the total assets under management (AUM) for the Ether Fund has “falled from its peak of US$23bn in November 2021 to US$8.7bn” as of last week.

Specifically, it appears that institutional investors sold their BTC and ETH offerings before the latest price carnage for both assets occurred.

related: Bitcoin price drops to lowest since May as Ethereum market loses 18.4%

According to data from CoinGecko, between June 6 and June 10, the price of BTC and ETH fell by 4.7% and 5.9%. However, since June 11, BTC and ETH are down by 25.7% and 33.2%, respectively.

In addition to BTC and ETH outflows, multi-asset funds saw an outflow of $4.7 million, and short bitcoin products posted a minimum outflow of $200,000. At the same time, investors also “avoid linking altcoin positions.”

Flow by Asset: CoinShares