Cryptocurrency funds remained profitable last week, although inflows decreased significantly as crypto products saw a historic day of outflows after a hawkish speech from the Federal Reserve chairman.
Speculators invested a total of $308 million in funds throughout the week, including Bitcoin ETFs. However, on Thursday, investors withdrew a record-breaking $576 million, according to data from European fund manager CoinShares. By Friday, this number had increased to $1 billion.
CoinShares stated that this sudden shift, with investors retracting their investments, was likely a response to the hawkish dot plot released by the Federal Reserve. These funds had added over $3.2 billion in assets the previous week, which means inflows decreased by over 90% week-over-week.
Last week, the central bank of the United States cut interest rates as expected. However, Federal Reserve Chair Jerome Powell’s speech indicating a less aggressive rate cut in 2025 alarmed investors. Assets like Bitcoin and other cryptocurrencies have historically performed better in a low-interest-rate environment.
Following the Fed’s speech, Bitcoin and other major assets experienced a sharp decline. According to CoinGecko, Bitcoin is currently trading at $93,245 per coin, after dropping nearly 13% over a seven-day period. Last Tuesday, it reached a new all-time high of just over $108,000, just before the plunge.
CoinShares also reported that investors who sought exposure to altcoins through exchange-traded products last week switched from Solana to Ethereum. Products providing exposure to Ethereum, the second-largest digital coin, received $51 million in inflows, while Solana experienced $8.7 million in outflows.
Investment funds tracking the price of cryptocurrencies have performed exceptionally well following the election of Donald Trump as the U.S. president, as he ran on a campaign to support the digital asset industry.
Edited by Andrew Hayward.