What has pushed Bitcoin into the “crypto winter” over the past six months can be explained as a direct result of increasingly hawkish rhetoric from the United States Federal Reserve (Fed). Institutional investors sold off $101.5 million worth of digital asset products last week in anticipation of “hawkish monetary policy” from the Fed.
The US inflation rate hit 8.6% year-on-year at the end of May, marking a return to levels not seen since 1981. As a result, markets are expecting the Fed to take significant action to control inflation.
According to the latest edition of CoinShares Digital Asset Fund Flows Weekly Report, outflows from June 6 to June 10 were mainly led by investors from the Americas with $98 million, while Europe only accounted for $2 million.
Products that provide exposure to the top two crypto-assets, Bitcoin (BTC) and Ethereum (ETH), account for nearly all outflows at $56.8 million and $40.7 million respectively corresponding. The figures to date also show a staggering $91.1 million in outflows for BTC products and $72.3 million in total outflows for ETH products.
“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.”
While CoinShares thinks Bitcoin has been pushed into crypto winter, year-to-date (YTD) inflows for BTC investment products have remained at $450.8 million. Meanwhile, funds that offer ETH exposure have seen massive outflows year-to-date at $386.5 million, showing that institutional investor sentiment remains in favor of digital gold.
The report also highlights that total assets under management (AUM) for Ether funds have “fallen from a peak of US$23 billion in November 2021 to US$8.7 billion” last week.
Notably, it appears that institutional investors sold off their BTC and ETH products before the latest price carnage hit both assets.
According to data from CoinGecko, from June 6 to June 10, BTC and ETH prices fell 4.7% and 5.9% each. However, since June 11, BTC and ETH have dropped by around 25.7% and 33.2%, respectively.
In addition to BTC and ETH inflows, multi-asset funds have seen outflows of $4.7 million and short Bitcoin products have seen outflows of $200,000. At the same time, crypto investors also “stay away from adding to altcoin positions.”
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