The current state of the crypto market has sparked many questions and assumptions with CoinShares reporting that almost $100M has left US crypto funds in anticipation of hawkish monetary policy.
Coinshares claims that Bitcoin has been pushed into “crypto winter” over the last six months, asserting that this is due to the US Federal Reserve’s increasingly hawkish rhetoric.
Inflation rates in the United States reached 8.6% year on year at the end of May, a level not seen since 1981. As a result, the market expects the Fed to take significant action to bring inflation under control, with some traders predicting three more 0.5 percent rate hikes by October.
According to the latest edition of CoinShares’ weekly Digital Asset Fund Flows report, outflows totaled $98 million between June 6 and June 10, with Europe accounting for only $2 million.
At $56.8 million and $40.7 million, respectively, products offering exposure to crypto’s top two assets, Bitcoin (BTC) and Ethereum (ETH), accounted for nearly all outflows. The month-to-date numbers likewise present a bleak picture, with BTC outflows totaling $91.1 million and ETH outflows totaling $72.3 million.
“What has pushed Bitcoin into a “crypto winter” over the last six months can by and large be explained as a direct result of an increasingly hawkish rhetoric from the US Federal Reserve.”
Bitcoin in a crypto winter
Even though CoinShares said Bitcoin was in a crypto winter, the amount of money that has been put into BTC investment products so far this year is still $450.8 million. ETH funds, on the other hand, have lost $386,5 million so far this year, which shows that institutional investors still like digital gold a lot more than ETH.
The report also mentioned that as of last week, the total assets under management (AUM) for Ether funds had gone down from a high of US$23 billion in November 2021 to US$8.7 billion.
Notably, it seems that institutional investors sold their BTC and ETH products before most of the recent price carnage happened to both assets.
According to data from CoinGecko, the prices of BTC and ETH fell by 4.7% and 5.9%, respectively, between June 6 and June 10. But since June 11, the prices of BTC and ETH have fallen by about 25.7% and 33.2%, respectively.
Aside from the outflows of BTC and ETH, there were outflows of $4.7 million from multi-asset funds and a small amount of $200,000 from Short Bitcoin products. Investors also “stayed away from adding to their altcoin positions.”
