Digital asset investment products saw their highest-ever weekly outflows last week, according to the latest Digital Asset Fund Flows Weekly Report released by . coinshare, The $255 million in net outflows accounted for 1.0% of total assets under management (AUM) of the space.
Expressed in terms of percentage of AuM, last week’s outflow represented the second largest outflow of capital from crypto after AuM declined by 1.9% the week before in May 2019. Subsequently, however, it amounted to $52 million in outflows from digital asset investments. products.
Bitcoin Outflows dominated with $243.5 million long-bitcoin investment products, while $1.2 million left short-products. Ethereum Saw weekly outflows of $11 million. Altcoin net inflows were close to neutral – Litecoin and Tron saw capital losses of $0.3 million, while Solana, XRP, and Polygon saw gains of $0.4, $0.3, and $0.1 million, respectively. Other altcoins added a new $1.5 million in losses.
Last week’s outflows from crypto products wiped out net inflows for the year. Net inflows since the beginning of January now stand at -82 million dollars.
Investors abandon crypto over banking concerns
Investors dumped their digital asset investments at such a rate last week due to concerns about a series of high-profile crypto-linked US bank failures, including silvergate And SVB Financial, The failures of these banks also raised fears among investors about undermining the fiat-to-crypto on-ramp and its collateralization. Circle’s USDC stablecoinIn which some reserves were kept in these institutions.
Bitcoin At one point last Friday there was a drop back all the way to its 200-day moving average and a true test of price in the upper $19,000s. Investors were also concerned about the ongoing aggressive messaging from the Fed on the need to hike interest rates, as expressed in a speech earlier in the week by Fed Chair Jerome Powell.
and missed a face-ripping rally
However, investors who had dumped their crypto holdings have missed out on the face-ripping rally during the past two days. Bitcoin Trading at a low of $24,000, up an astonishing 24% compared to last Friday’s low.
The rally comes as 1) US authorities came in to protect Silvergate and SVB depositors from any losses and introduced a new $25 billion liquidity program to help prevent further bank runs and 2) markets aggressively From the Fed retreated on tighter bets. The Fed cannot continue to tighten with the US banking system on the brink of collapse, especially given that its aggressive hiking campaign has been a main driver of weakness.
According to CME’s Fed Watch tool, markets now give only a 65% chance that the Fed will hike interest rates by 25 bps later this month. A week ago, markets were giving about a 30% chance of a rate hike of 50 bps later this month, and a hike of at least 25 bps with absolute certainty.
The money market then gives only a 32% chance of another 25 bps rate hike (taking rates to 5.0-5.25%) in May. By the end of 2023, currency markets are now pricing in US interest rates to fall to around or below 4.0%. This time last week, that pricing was skewed more toward year-end rates in the mid-5.0% region.
Heavy revaluation on expectations of Fed tightening has triggered a decline in US bond yields, from around 4.0% 2 years ago, to around 5.0% a few days ago. The US dollar is naturally coming under pressure. There is extreme haste for such drastic easing of financial conditions by the US authorities to prevent a financial crisis. cryptoAs seen in the price action over the past two days.