Massive Outflows Shake Digital Asset Investment Products

• Digital asset funds see $726 million outflows, driven by US rate cut uncertainty.
• Bitcoin leads outflows with $643 million, while Solana records $6.2 million inflows.
• US outflows dominate, while Europe shows resilience with inflows from Germany and Switzerland.

Digital asset investment products experienced a significant exodus last week, with a massive $726 million being withdrawn. This outflow, among the largest this year, was fueled by anticipation surrounding potential interest rate cuts by the US Federal Reserve.

Most of the outflows were concentrated in the United States, contributing $721 million of the total. This marks the second time in 2024 that digital asset fund flows have reached this level, matching the largest outflow earlier in March.

Bitcoin Bears the Brunt, Solana Shines

Bitcoin bore the brunt of the outflows, losing $643 million from investment products. This decline coincides with increasing uncertainty around US economic policy, as stronger-than-expected macroeconomic data hinted at a possible 25 basis point rate cut by the Federal Reserve. Short Bitcoin, however, saw a minor inflow of $3.9 million, indicating mixed sentiment among investors.

In contrast, Solana emerged as a standout performer, attracting $6.2 million in inflows, the highest among all digital assets. Ethereum also saw substantial outflows totaling $98 million, primarily from Grayscale Trust, which faced significant pressure amidst shifting market conditions.

Read also: Altcoins Face Downside Risk as Fed Rate Cut Looms: Analyst

US Leads Outflows, Europe Shows Resilience

Regionally, the outflows were heavily concentrated in the United States, accounting for $721 million of the total. This reflects growing investor anxiety as the Federal Reserve’s next moves remain unclear. Canada also saw outflows of $28 million, reinforcing the North American trend of caution.

European markets, on the other hand, demonstrated resilience despite the uncertainty. Germany and Switzerland both saw inflows, with Germany contributing $16.3 million and Switzerland adding $3.2 million. This positive trend sharply contrasts with the outflows observed in North America.

Read also: Interest Rate Cut vs. Inflation: The Fed’s Dilemma and Crypto’s Future

Mixed Sentiment Prevails

The overall sentiment remained mixed, with both negative and positive developments impacting the market. The upcoming Consumer Price Index (CPI) inflation report is expected to play a crucial role in shaping the direction of future rate cuts. Should inflation numbers fall below expectations, a more significant rate cut could follow, likely influencing the next round of digital asset flows.