Crypto Investment Products Experience $360 Million in Outflows
Cryptocurrency investment products saw $360 million in outflows last week as investors responded to Federal Reserve Chair Jerome Powell's cautious comments regarding future interest rate cuts. The data, released by CoinShares, shows persistent investor uncertainty despite an interest rate cut by the Fed last Wednesday.
Market Response to Fed Statements
After the Federal Reserve cut rates, Powell noted that a further reduction in December was not a foregone conclusion. The ongoing U.S. government shutdown and lack of new economic data further contributed to market hesitation. Many investors appeared to reassess their exposure to risk assets such as crypto, resulting in week-over-week outflows.
- Most selling pressure came from the United States, where outflows reached $439 million.
- These were partially offset by inflows from Germany and Switzerland.
Bitcoin and Ethereum See Divergent Flows
Bitcoin ETFs led withdrawals, posting $946 million in redemptions during the period. In contrast, Ethereum investment products saw $57.6 million in inflows, though daily trading activity suggested mixed investor sentiment. This divergence points to shifting preferences among cryptocurrency investors.
Solana ETFs Attract Record Inflows
Solana-based funds registered significant activity, attracting $421 million in inflows the second-largest total on record for the asset class. Demand was driven by the recent launch of U.S.-listed Solana exchange-traded funds. Year-to-date inflows into Solana products are now $3.3 billion, according to CoinShares.
Bitwise initiated its Solana Staking ETF (BSOL) last week, debuting with $222.8 million in initial seed assets. BSOL offers direct exposure to Solana along with returns from onchain staking rewards. By Friday, spot Solana ETFs had added $44.48 million in inflows.
Comments and Market Movement
Vincent Liu, chief investment officer at Kronos Research, explained to Cointelegraph that the inflows highlight growing demand for staking yield and signal ongoing capital rotation, as investors take profits from earlier rallies in Bitcoin and Ether.
Despite these inflows, Solana's price performance has been negative. At the time of writing, SOL was trading around $166, marking a 9% drop over the past 24 hours and a 26% decline over 30 days, according to CoinGecko.
Short-Term Outlook
The recent outflows followed a period of inflows attributed to a lower-than-expected Consumer Price Index (CPI) reading in late October. The report suggests investors remain highly sensitive to central bank policy and macroeconomic developments, with asset allocation quickly shifting based on changing expectations.
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