In brief
- BlackRock Bitcoin and Ethereum funds shed a total of $876 million amid market uncertainty.
- December Fed rate cut odds dropped from 91.7% to 64.6%, creating bearish sentiment for crypto.
- Solana defied the trend with $118 million in weekly inflows and $2.1 billion over nine weeks.
Bitcoin and Ethereun funds shed more than $1.17 billion in the past week, according to a new report from digital asset manager CoinShares.
BlackRock’s iShares Bitcoin and Ethereum funds accounted for $876 million worth of withdrawals last week, more than any other issuer. The Fidelity Wise Original Bitcoin Fund accounted for another $438 million worth of outflows.
The outflow from BTC and ETH funds was due to “negative sentiment that pervaded the markets due to ongoing gyrations in the crypto markets” thanks to the Oct. 10 flash crash and growing uncertainty about a December rate cut from the Federal Open Markets Committee.
As of Monday morning, futures trading suggests there’s a 64.6% chance that the FOMC will lower rates by 25 basis points during its December meeting, according to the CME FedWatch Tool. A month ago, traders thought there was a 91.7% chance that there would be another cut.
Federal Reserve Chair Jerome Powell cautioned last month that a further rate cut in December is not a foregone decision and acknowledged voices calling for the Fed to “at least wait a cycle” before reducing rates further.
That’s a bearish signal for crypto traders because, historically, Federal Reserve rate cuts boost the flow of capital into riskier assets like equities and digital assets.
The CoinShares report also noted there is still a stark difference in activity for ETP shares on U.S. and European exchanges. U.S. exchanges had $1.2 billion worth of selling, accounting for the bulk of negative sentiment. But Germany and Switzerland inflows totaled $41.3 million and $49.7 million, respectively.
“EPT trading volumes remained elevated at $43 billion for the week as flows on an intraday basis briefly recovered on Thursday as optimism grew that progress was being made towards resolving the U.S. government shutdown, but this prove short-lived, with renewed outflows emerging on Friday as those hopes faded,” wrote CoinShares Head of Research James Butterfill.
Meanwhile, flow to Solana and other altcoin funds have been consistently trending positively.
“Altcoins remained buoyant, with Solana seeing $118 million last week and $2.1 billion over the last 9 weeks,” Butterfill said. “Other notable inflows were seen in HBAR ($26.8 million) and Hyperliquid ($4.2 million).”
The Bitwise Solana ETF has had steady demand since it debuted Oct. 28. Canary Capital introduced its HBAR ETF, which trades on the Nasdaq under the HBR ticker, on Oct. 27 and has already attracted nearly $69 million worth of assets.
And although there’s currently no spot ETF that offers exposure to HYPE, the native token for the Hyperliquid Layer 1 blockchain, there is a 21Shares exchange-traded product trading on the SIX Swiss Exchange since August.
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