Investor Sentiment Shifts Amidst Monetary Policy Uncertainty
Global crypto investment products recorded $360 million in net outflows last week, reversing the prior week's $921 million in inflows. Asset manager CoinShares attributed the shift to Federal Reserve Chair Jerome Powell's hawkish tone regarding December rate cuts.
Powell characterized a December rate reduction as "not a foregone conclusion," creating uncertainty among investors already navigating limited economic data releases. James Butterfill, CoinShares Head of Research, described the combination as leaving investors in a state of limbo.
The United States drove the negative sentiment, with crypto funds in the region experiencing $435 million worth of net outflows. Germany and Switzerland partially offset the decline with respective inflows of $32 million and $30.8 million, while other regions saw modest flows.
Bitcoin and Ethereum Performance
Bitcoin and Ethereum declined 6.5% and 10.5% respectively last week, ending investor hopes for "Uptober" gains and breaking a six-year streak of October rallies.
Bitcoin-based ETPs dominated outflows with $946 million exiting funds last week. Butterfill noted that despite recent interest rate cuts, Powell's hawkish interpretation weighed heavily on Bitcoin prices as it remains the digital asset most sensitive to monetary policy developments.
U.S. spot Bitcoin exchange-traded funds alone saw $799 million in net outflows, led by $403.4 million departing BlackRock's IBIT. In contrast, Ethereum products attracted $57.6 million globally, with U.S.-based spot Ethereum ETFs adding $16.1 million. Ethereum
Solana ETPs See Strong Inflows
Solana ETPs recorded $421 million in inflows globally last week, the second-largest on record, driven by strong demand for newly launched U.S. ETFs. Year-to-date inflows for Solana products reached $3.3 billion.
Divergent Investor Preferences
The divergent flows highlight shifting investor preferences as traditional monetary policy concerns clash with enthusiasm for emerging blockchain platforms and infrastructure.