Digital Asset Investment Products See Largest Outflows Since March

Key Points:

• Digital asset investment products saw outflows of $72 million, matching the largest outflows recorded this year.
• The U.S. and Canada experienced significant outflows, while Europe, particularly Germany and Switzerland, saw positive inflows.
• Bitcoin and Ethereum faced substantial outflows, while Solana attracted the largest inflows.

Digital asset investment products had heavy outflows of $72 million, one of the largest on record this year and matching another in March.

Read more: Interest Rate Forecast Shows 70% of Polymarket Traders Predict Fed Cut

Digital Asset Investment Products Reach $72 Million of Outflow as Fed Rate Speculation Intensifies

The rout of digital asset investment products was mostly attributed to surprise strong macro data print the previous week, which had supported expectations of a 25bp interest rate cut from the US Federal Reserve.

Daily outflows slowed as employment figures fell short of expectations as the week progressed, leaving market opinions divided. Some investors now believe that a 50bp cut could be in store. The main event for the upcoming week will be the CPI inflation report expected on Tuesday; if the headline inflation rate comes in below expectation, the likelihood of a larger cut of 50bp could rise.

In the U.S., there were outflows of $721 million, while in Canada, the outflows were $28 million. The sentiment reversed quite positively for Europe with Germany registering inflows of $16.3 million and Switzerland witnessing new investments of $3.2 million.

Bitcoin and Ethereum Decline, Solana Witnesses Inflows

Bitcoin saw very heavy outflows of $643 million. Yet, short-bitcoin products compiled minor inflows of $3.9 million, illustrating that some investors are exposed to hedges for potential losses. Ethereum also witnessed heavy outflows of $98 million. The main triggers were the sell-offs in the Grayscale Trust as well as newly issued Ethereum ETFs, which have similarly subsided in terms of demand through recent weeks.

However, not all digital assets performed dismally. Solana registered the biggest inflows at $6.2 million and proved resilient in the otherwise gloomy market.

Investors now awaited important economic data that would probably indicate what the next move of the Federal Reserve would be as market sentiment was significantly divided.