Institutional investors dumped $101.5 million worth of digital asset products last week in “anticipation of aggressive monetary policy” from the US Federal Reserve, according to CoinShares.
The US inflation rate reached 8.6% year-on-year at the end of May, marking a return to levels not seen since 1981. As a result, the market expects the Fed to take significant steps to curb inflation, with some traders forecasting three more 0.5% rate hikes in October.
According to the latest edition of CoinShares’ weekly “Digital Asset Fund Flows” report, outflows between June 6 and 10 were mainly led by investors from the United States, with USD 98 million, while Europe only accounted for USD 2 million.
Products offering exposure to the two biggest cryptocurrency assets, Bitcoin (BTC) and Ether (ETH), accounted for nearly all of the outflows, at $56.8 million and $40.7 million each. Month-to-date figures also paint a grim figure: $91.1 million outflows for BTC products and $72.3 million total outflows for ETH products.
“What has thrown bitcoin into a “crypto winter” over the past six months can largely be explained as a direct result of increasingly harsh rhetoric from the US Federal Reserve.”
Although CoinShares suggested that bitcoin is in a bear market, Year-to-date (YTD) inflows for BTC investment products remain at $450.8 million. By comparison, funds offering exposure to ETH have seen strong outflows so far this year of $386.5 million.suggesting that sentiment among institutional investors remains largely in favor of digital gold.
The report also highlights that Ether funds’ total assets under management (AUM) “have fallen from their high of $23 billion in November 2021 to $8.7 billion” as of last week.
In particular, It appears that institutional investors dumped their BTC and ETH commodities before most of the latest price crash for both assets took place.
According to data from CoinGecko, between June 6 and 10, the price of BTC and ETH fell by 4.7% and 5.9% each. Nevertheless, since June 11, BTC and ETH have plunged around 25.7% and 33.2%, respectively.
Aside from BTC and ETH outflows, multi-asset funds saw outflows of $4.7 million, and bitcoin shorts saw minimum outflows of $200,000.. At the same time, investors also “refrained from adding altcoin positions.”
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