After dominating crypto flows for most of the year so far, bitcoin fell out of the eyes of investors last week. This is according to the latest weekly digital asset fund flow Report produced by crypto analytics firm CoinShares, which tracks investment flows into digital asset investment products. Last Thursday, bitcoin fell below $22,000 for the first time since mid-January, and ultimately lost 5.0% last week.
According to CoinShares, bitcoin investment products saw net outflows of $10.9 million last week, while altcoin investment products saw net inflows of $3.9 million. It is worth noting that short-Bitcoin products saw outflows of $3.5 million, with some investors taking advantage of the recent pullback to take profits or reduce losses on short positions in view of the 2023 rally.
Ethereum is finally starting to see some love. The world’s second largest cryptocurrency by market capitalization and leading decentralized finance/applications blockchain infrastructure provider saw $5.1 million inflows, bringing its year-to-date inflows to $15 million. It is still well behind bitcoin, which saw $183 million inflows to related investment products.
Net crypto outflow triggered by fear of Fed tightening
CoinShares reported a $7 million net outflow into digital asset investment products as investors “became fearful of the prospect of additional rate hikes by the US Federal Reserve,” in the wake of a week of macro data that beat expectations for upside. gives”. The week before last, US jobs and ISM services PMI survey data for January rebounded largely, signaling that the US economy is still warm enough and boosting confidence in the Fed that they can do more without triggering a recession. May go ahead with rate hike.
Investors face another testing week of macro risks
This week could easily follow in the footsteps of the previous, with further outflows from digital asset investment products expected if macro headwinds persist. Crypto traders will be monitoring Tuesday’s US Consumer Price Index (CPI) report. Worryingly for crypto bulls, economists are predicting an increase in MoM inflation pressure, which, if confirmed, could worry Fed policy makers and take and keep interest rates above 5.0% for some time. can increase its resolution.
This could reinforce the recently observed uptrend in the US dollar against most of its major G10 peers and US bond yields, which could weigh heavily on crypto. Rise in US Inflation Takes Bitcoin to $20,500 Support Area (18)th January low and 50DMA). A break below here would open the doors for a test of the 200 DMA and a move higher towards the $19,000s in real price.
Crypto traders will also be monitoring US retail sales data on Thursday, which will inform expectations on how likely the US is to fall into recession sometime later this year. Market participants will also be watching for comments from Fed policymakers who will speak throughout the week.
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