Cryptocurrency investment products experienced outflows totaling $360 million last week. This shift in investor sentiment appears to be a direct reaction to cautious remarks made by Federal Reserve Chair Jerome Powell regarding future interest rate cuts.
Despite a rate cut announced on Wednesday, Powell's statement that another reduction in December was "not a foregone conclusion" contributed to market uncertainty. This was further compounded by the absence of economic data due to the ongoing government shutdown, according to a report by CoinShares on Monday.
The majority of the selling pressure originated from United States markets, which recorded outflows of $439 million. This significant outflow was partially counteracted by modest inflows from Germany and Switzerland. Bitcoin ETFs were particularly affected, leading the decline with redemptions amounting to $946 million.
While Bitcoin funds absorbed the majority of the outflows, not all digital assets followed the same trend. Solana emerged as a notable exception, attracting $421 million in inflows, marking its second-largest inflow on record. This surge in demand is attributed to the popularity of newly launched United States exchange-traded funds (ETFs) for Solana, pushing its year-to-date total inflows to $3.3 billion.
Ethereum also witnessed positive momentum, with $57.6 million in inflows. However, daily trading activity suggested a more mixed sentiment among investors for Ether.
These outflows follow a period of substantial gains, as crypto products had accumulated $921 million in inflows the previous week. This prior influx was largely driven by lower-than-expected Consumer Price Index (CPI) data released on October 24.
New Solana Staking ETF Debut
Bitwise launched its new Solana Staking ETF (BSOL) last Tuesday, which debuted with $222.8 million in seed assets. This strong initial funding signals significant institutional interest in Solana staking products.
The BSOL ETF provides investors with direct exposure to Solana (SOL). It offers an estimated annual yield of 7% through on-chain staking rewards.
By Friday, spot Solana ETFs had recorded a fourth consecutive day of inflows, adding $44.48 million to their total.
Vincent Liu, chief investment officer at Kronos Research, commented that this trend indicates a growing interest in staking yields. He also noted an ongoing "capital rotation" as traders take profits from recent rallies in Bitcoin (BTC) and Ether (ETH).
Despite the substantial inflows into Solana ETFs, the price of SOL was trading around $166 at the time of writing. This represents a decrease of over 9% in the past 24 hours and approximately 26% over the past 30 days, according to data from CoinGecko.
