Crypto Outflows Surge Amid Hawkish Fed Stance

Crypto investment products have experienced their first net outflows in five weeks, with a total of $415 million exiting the market, according to a report from CoinShares. Major asset managers such as BlackRock, Fidelity, Grayscale, and 21Shares have contributed to this outflow.

James Butterfill, CoinShares’ Head of Research, attributes the significant outflows to Fed Chair Jerome Powell’s hawkish stance at a recent congressional meeting and the current U.S. inflation data, which has exceeded expectations. Before the $415 million outflow, crypto investment products registered $6.74 billion in inflows over the previous five weeks.

A detailed analysis by region of last week’s outflows shows that U.S.-based funds led the way, with a total of $464 million lost. Germany’s digital investment products lost $21 million, while Switzerland and Canada contributed $12.5 million and $10.2 million to the outflow, respectively. The other countries remained largely unaffected by the outflows.

Market experts note that Bitcoin has historically reacted to rate-cut expectations. When Powell testified before the U.S. Congress on February 12, maintaining that the central bank would remain slow to cut rates this year, BTC suffered. However, Powell’s hawkish stance has not been sufficient to rally the U.S. Dollar Index (XY), and Bitcoin has continued to experience price fluctuations in the broader crypto market.

As of this writing, BTC is trading at $96,354.53, representing a 0.80% dip in the last 24 hours. The coin had dipped to a low of $95,835.09 before posting the current rebound. Despite the Fed’s hawkish stance, investors have not been discouraged, as trading volume jumped by a significant 43.08% to $22.52 billion within the same time frame.

As a new trading week begins, Ryan Lee, Bitget Research’s Chief Analyst, believes that Bitcoin’s ability to stay above certain support levels might help push its price above the psychological $100,000 level. Bitcoin’s attempt to breach $100,000 resistance has met rejection in the last seven days, but analysts believe this week could bring a different outcome.