Investments in digital asset funds have seen a decline for the second week in a row, with a total of $206 million being withdrawn between April 15-19, according to data from CoinShares, a digital asset investment firm. The majority of the outflows were from Bitcoin (BTC) funds, with $192 million leaving the market ahead of the halving event. Ether (ETH) investment products also experienced outflows of $34 million, marking their sixth consecutive week of negative flow.
Not only have digital asset funds been affected, but investment in blockchain equities has also been declining, with the sector experiencing its 11th consecutive week of outflows, totaling $9 million.
CoinShares attributes this downtrend to investors’ concerns about rising interest rates in the United States. The increase in interest rates makes less risky financial instruments more attractive compared to volatile assets like cryptocurrencies.
The Federal Reserve had previously anticipated easing its monetary policy in mid-2024, but recent inflation data have dampened those hopes. The Consumer Price Index in March increased by 3.5%, surpassing expectations for the third consecutive month. This suggests that lower rates may not be a reality until 2025. Currently, the federal funds rate sits between 5.25% and 5.50%.
While the trading volume for Bitcoin exchange-traded funds (ETFs) slightly declined to $18 billion over the week, the outflows from Bitcoin funds were not seen as an opportunity to short the cryptocurrency. According to CoinShares, this trend indicates that investors are stepping away from volatility but are not necessarily expecting the Bitcoin price to crash in the near future.
The report states, “These volumes represent a lower percentage of total Bitcoin volumes (which continue to rise) at 28%, compared to 55% a month ago.”
Inflows into Bitcoin ETFs have significantly slowed since their peak in March. However, BlackRock’s iShares Bitcoin Trust (IBIT), the largest ETF in terms of assets managed, has maintained a steady level of investor interest this month, attracting $1.4 billion in positive flows as of April 19.
In other news, it has been reported that 1 in 6 new Base meme coins are scams, with 91% of them having vulnerabilities, according to a magazine.