Hawkish Fed Stance Triggers $360 Million Outflow from Digital Assets

In the latest report from CoinShares, digital asset investment products have experienced a significant outflow of $360 million. The outflow was primarily driven by Federal Reserve Chair Jerome Powell’s hawkish comments regarding potential interest rate cuts in December, which left investors uncertain about future market conditions.

Regional Impact and Bitcoin's Sensitivity

The outflow was notably concentrated in the United States, where digital asset investments saw a withdrawal of $439 million. This was slightly counterbalanced by inflows in European markets, with Germany and Switzerland contributing $32 million and $30.8 million, respectively. Bitcoin ETFs faced the most significant impact, with a staggering $946 million pulled out by investors, indicating Bitcoin's heightened sensitivity to monetary policy changes.

Solana and Ethereum: A Mixed Bag

Meanwhile, Solana emerged as a bright spot among digital assets, attracting $421 million in inflows, marking the second-largest inflow on record. These inflows were largely fueled by the launch of new U.S. ETFs, pushing Solana's year-to-date inflows to $3.3 billion. Ethereum also saw positive movement with $57.6 million in inflows, though investor sentiment remained mixed, as evidenced by the daily flow variations.

Market Uncertainty

Despite a recent interest rate cut, Powell's remarks have cast a shadow of uncertainty over the market, as the possibility of another rate cut in December is not guaranteed. The absence of significant U.S. economic data releases has further contributed to investor hesitancy.

For further insights into these market dynamics, the full report can be accessed on the CoinShares blog.