Investments in digital asset funds have experienced a decline for the second consecutive week, with a total of $206 million being withdrawn between April 15-19, according to data provided by CoinShares, a digital asset investment firm. The majority of the outflows came from Bitcoin (BTC) funds, with $192 million leaving the market in anticipation of the halving event. Ether (ETH) investment products also saw outflows of $34 million, marking the sixth week in a row of negative flow.
The decline in investments is not limited to digital asset funds alone. Investment in blockchain equities has also been dwindling, with the sector recording its 11th consecutive week of outflows, amounting to $9 million.
CoinShares suggests that the decrease in investments can be attributed to investors’ concerns regarding rising interest rates in the United States. As interest rates increase, less risky financial instruments become more appealing compared to volatile assets like cryptocurrencies.
The Federal Reserve had initially planned to ease its monetary policy in mid-2024 if economic conditions were favorable. However, recent inflation data have dampened these expectations. The Consumer Price Index for March showed a 3.5% increase, surpassing expectations for the third consecutive month. This indicates that lower interest rates may not become a reality until 2025. Currently, the federal funds rate ranges between 5.25% and 5.50%.
Although the trading volume for Bitcoin exchange-traded funds (ETFs) slightly declined to $18 billion over the week, the outflows from Bitcoin funds were not seen as an opportunity to short the cryptocurrency. CoinShares suggests that this trend indicates investors’ desire to steer clear of volatility, but without necessarily expecting a crash in Bitcoin’s price anytime soon.
The report states, “These volumes represent a lower percentage of total Bitcoin volumes (which continue to rise) at 28%, compared to 55% a month ago.”
Inflows into Bitcoin ETFs have significantly slowed down since their peak in March. However, BlackRock’s iShares Bitcoin Trust (IBIT), the largest ETF in terms of assets managed, has maintained a steady level of investor interest this month. As of April 19, it has attracted $1.4 billion in positive flows.
In other news, it has been reported that 1 in 6 new Base meme coins are scams, with 91% of them having vulnerabilities.