Significant Outflows Hit Digital Asset Funds Amid Hawkish FED Stance

In a notable shift for digital asset investment products, the market has witnessed substantial outflows totaling $415 million. This marks the first significant downturn after a remarkable 19-week post-U.S. election period that saw inflows reaching $29.4 billion, as reported by CoinShares.

Hawkish FED Rhetoric and Inflation Data

The outflows were largely driven by hawkish signals from the Federal Reserve, as Chair Jerome Powell indicated a potential shift towards stricter monetary policy. Additionally, the U.S. inflation data released recently surpassed market expectations, further influencing investor sentiment and triggering the withdrawal of funds.

Bitcoin and Other Assets Affected

Bitcoin (BTC), known for its sensitivity to interest rate expectations, was significantly impacted, suffering outflows of $430 million. Interestingly, short-Bitcoin products did not attract corresponding inflows and instead experienced outflows amounting to $9.6 million.

Regional Outflow and Inflow Trends

The majority of outflows originated from the United States, totaling $464 million. However, other regions remained relatively stable, with Germany, Switzerland, and Canada recording inflows of $21 million, $12.5 million, and $10.2 million, respectively. Solana (SOL) emerged as a notable gainer with inflows of $8.9 million, followed closely by XRP and Sui with $8.5 million and $6 million, respectively.

Blockchain Equities and Market Activity

Despite the downturn in digital asset funds, blockchain equities saw an encouraging inflow of $20.8 million, pushing year-to-date inflows to $220 million. This indicates a continued interest and confidence in the blockchain sector despite broader market volatility.