Markets
Real Bitcoin fallout will soon be ‘obvious’ after Fed triggers $620M in ETF outflows – DL News
- Bitcoin ETFs suffered outflows of $621 million last week.
- Cryptocurrency investment firm CoinShares said the Fed was to blame.
- Hedge fund manager sees more headaches for crypto.
The Federal Reserve may have triggered the second-largest outflows on record for Bitcoin spot exchange-traded funds — and the worst could be yet to come.
Market watchers sounded the alarm after the Federal Open Market Committee said it would keep interest rates between 5.25% and 5.50%.
The situation resembles that of August 2022, when Fed Chairman Jerome Powell warned that rate hikes would cause “some pain” to the US economy, said Quinn Thompson, founder of crypto hedge fund Lekker Capital .
At the time, frightened investors sold risky assets, sending benchmark indexes tumbling.
“In a few weeks it will be a no-brainer,” says Thompson said on X. “This time he didn’t say it as explicitly because last time the market crashed so they had to ease earlier.”
ETF Waterfall
The “more hawkish than expected Fed meeting” triggered a cascade of outflows from spot Bitcoin ETFs to the tune of $621 million as investors reduced their exposure, crypto asset manager CoinShares said in a report.
ETF outflows were the largest Bitcoin has seen since March.
Bitcoin and other risk assets tend to perform better in lower rate environments.
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Total crypto assets under management in ETFs fell 6%, from $100 billion to $94 billion, due to capital outflows and price depreciation.
However, Ethereum investment products saw inflows totaling $13 million.
Lido and Ripple, two of the largest cryptocurrencies by market value, also bucked the trend, raking in a total of $3 million.
Crypto is not the only sector affected.
Investors abandoned nearly $22 billion from U.S. equity funds during the week, the largest outflows since December 2022.
Crypto market players
- Bitcoin is down 1% over the past 24 hours to trade at $65,480.
- Ethereum is down 0.3% at $3,430.
What we read
Tom Carreras is a markets correspondent for DL News. Do you have any advice on Bitcoin ETFs and the Fed? Contact us at tcarreras@dlnews.com.