Recently, digital asset investment products experienced a decrease in outflows amounting to $305 million. This negative sentiment was felt across various providers and regions. According to CoinShares, this decline can be attributed to the release of stronger-than-expected economic data from the United States. This data has led to a decrease in the probability of a 50-basis point interest rate reduction by the Federal Reserve. As a result, there has been a noticeable impact on the sentiment surrounding digital assets.
Bitcoin, in particular, was at the center of this negative sentiment, leading to $319 million in outflows in the past week. On the flip side, short Bitcoin investment products saw inflows of $4.4 million for the second consecutive week, marking the highest inflow since March. Additionally, Ethereum witnessed outflows of $5.7 million, and trading volumes remained stagnant at only 15% of the levels seen during the US ETF launch week. This stagnant activity mirrors the levels observed before the ETF launches.
Regionally, the US continued to dominate the outflows, accounting for $318 million during the week. Germany and Sweden also experienced smaller outflows amounting to $7.3 million and $4.3 million, respectively. On the other hand, Canada saw the most significant weekly inflows with $13.2 million, followed by Switzerland with $5.5 million and Brazil with $2.8 million within the same period. Hong Kong and Australia had smaller inflows, totaling $1.6 million and $1.2 million, respectively.
As the Federal Reserve approaches a potential policy change, there is an expectation that digital assets will increasingly react to interest rate expectations. This shift in sentiment and behavior among investors highlights the importance of macroeconomic factors and policy decisions on digital asset investment products. It remains to be seen how these trends will evolve in the coming weeks as economic conditions and market dynamics continue to fluctuate.
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