Crypto Funds Face $415 Million in Outflows Amid Hawkish Fed Signals and CPI Data

The streak of five consecutive weeks of inflows into crypto investment products from major asset managers like BlackRock, Fidelity, and Grayscale ended with $415 million in net outflows, according to CoinShares data.

Why the Outflows?

CoinShares Head of Research James Butterfill attributed the shift to:

• Fed Chair Jerome Powell’s hawkish stance on monetary policy during a Congressional hearing, signaling a slower pace for interest rate cuts.
• U.S. inflation data surpassing expectations, adding market uncertainty.

Impact on Bitcoin Funds and Global Trends

• Bitcoin-based funds took the hardest hit, with $430 million in outflows, reflecting their high sensitivity to interest rate expectations.
• Notably, short-bitcoin products also saw $9.6 million in outflows, indicating low bearish sentiment despite Bitcoin’s 2% price drop last week.

Regional Inflows Defy U.S. Trends

While U.S. crypto funds led the decline with $464 million in outflows, other regions showed positive momentum:

• Germany: +$21 million
• Switzerland: +$12.5 million
• Canada: +$10.2 million

Market Outlook

Despite Powell’s hawkish tone, analysts from QCP Capital noted the U.S. Dollar Index (DXY) has failed to rally—a signal that markets remain cautious but not overly pessimistic.