Bitcoin
Bitcoin’s True Consequences Will Soon ‘Be Obvious’ After Fed Generates $620 Million in ETF Outflows – DL News
- Bitcoin ETFs suffered $621 million in outflows last week.
- Crypto investment firm CoinShares said the Fed is to blame.
- A hedge fund manager sees more migraines because of crypto.
The Federal Reserve may have triggered the second-largest outflows on record for spot Bitcoin exchange-traded funds — and the worst may be yet to come.
Market watchers sounded the alarm after the Federal Open Market Committee said it will keep interest rates between 5.25% and 5.50%.
The situation resembles August 2022, when Fed Chairman Jerome Powell warned that rate hikes will cause “some pain” to the US economy, said Quinn Thompson, founder of crypto hedge fund Lekker Capital.
At that time, frightened investors sold risky assets, causing a drop in benchmark indices.
“In a few weeks it will be obvious,” Thompson he said in X. “This time he didn’t say it so explicitly because last time the market melted down and as a result they had to relax earlier.”
ETF waterfall
The “more aggressive than expected Fed meeting” triggered a cascade of outflows from spot Bitcoin ETFs worth $621 million as investors reduced their exposure, crypto asset manager CoinShares said in a report .
The ETF outflows were the largest Bitcoin has experienced since March.
Bitcoin and other risky 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 outflows and price depreciation.
However, Ethereum investment products recorded inflows totaling $13 million.
Lido and Ripple, two of the largest cryptocurrencies by market cap, also bucked the trend, raising $3 million in total.
Crypto wasn’t the only sector impacted.
Investors thrown away nearly $22 billion from U.S. equity funds over the week, the biggest outflows since December 2022.
Crypto Market Movers
- Bitcoin fell 1% in the last 24 hours, trading at $65,480.
- Ethereum fell 0.3% to $3,430.
What are we reading
Tom Carreras is markets correspondent for DL News. Have any tips on Bitcoin ETFs and the Fed? Get in touch at tcarreras@dlnews.com.