CoinShares’ latest report has revealed that Bitcoin and Ethereum investment products have recorded the highest outflows since the start of the year, losing over $400 million in the past seven days as uncertainty over US monetary policy rises.
Why Are Crypto Products Bleeding?
According to the firm’s Head of Research, James Butterfill, these products started witnessing significant outflows last Tuesday when Federal Reserve Chair Jerome Powell said that the American Central Bank wasn’t in a hurry to cut interest rates.
In CoinShares’ report, Butterfill claimed that BTC has been sensitive to developments around rate cuts in the past few years and continues to perform poorly in an environment marked by high interest rates. His statement isn’t far from the truth, given that Bitcoin has plummeted 2.4% in the last seven days to trade at $96,032 as of this writing.
Investors Pour $25 Billion Into Crypto Investment Products
However, Butterfill says the latest investors’ reaction to Powell’s speech is ‘relatively muted,’ arguing that the $400 million worth of outflows are ‘small potatoes’ when compared to the over $25 billion in inflows processed since last October.
Also read:Of the $25 billion, Bitcoin products account for approximately 81% or $20.25 billion. This year alone, BTC has seen over $5.5 billion in inflows. Notably, Ethereum investment products have seen the most inflows in February, attracting over $780 million. Butterfill claims that ETH could continue outperforming Bitcoin in the next two months as investors shift their focus to the Ethereum ecosystem.
It is worth mentioning that ETH defied the marketwide downtrend on Monday, rallying 2% to trade briefly above the $2,800 key resistance.
Traders React to Latest Inflation Report
As mentioned, Bitcoin has posted losses in the past week due to inflation concerns. Last week, the US Consumer Price Index report indicated that inflation had risen 0.3% in January, minimizing the chances of a rate cut by the Federal Reserve.
Now, traders predict only a 2% chance that the US Central Bank will slash interest rates in March during the FOMC meeting. However, they foresee a 51% chance of a possible rate cut at the start of the third quarter in July, according to data from CME FedWatch.
At Tokenhell, we help over 5,000 crypto companies amplify their content reach—and you can join them! For inquiries, reach out to us at info@tokenhell.com. Please remember, cryptocurrencies are highly volatile assets. Always conduct thorough research before making any investment decisions. Some content on this website, including posts under Crypto Cable, Sponsored Articles, and Press Releases, is provided by guest contributors or paid sponsors. The views expressed in these posts do not necessarily represent the opinions of Tokenhell. We are not responsible for the accuracy, quality, or reliability of any third-party content, advertisements, products, or banners featured on this site. For more details, please review our full terms and conditions / disclaimer.