James Butterfill, head of research at CoinShares, reports that digital asset funds suffered their largest weekly outflow since the month of February, totaling 2 billion dollars. This massive capital exodus responds directly to growing market anxiety regarding US monetary policy and recent restrictive signals from the Fed.
On the other hand, the report highlights that the price of XRP sharply reversed its previous positive trend, recording outflows of nearly 16 million dollars amidst a generalized institutional retreat. Additionally, Bitcoin investment products lost 1.38 billion, while Ethereum suffered proportionally more, with outflows representing 4% of its assets under management, totaling 689 million dollars this week.
Will institutional capital flight continue given the Fed’s aggressive stance?
Likewise, macroeconomic uncertainty has been exacerbated by Chairman Jerome Powell’s aggressive tone, virtually eliminating hopes for a rate cut in December. This situation, combined with sales distribution by whales, has caused total assets under management to plummet by 27% since the highs seen in early October.
In this way, American investors led the global negative trend, accounting for 97% of the total recorded outflows. However, Europe showed some resilience, as Germany broke the trend by recording minor inflows, suggesting that risk aversion is not uniform across all geographic regions, although defensive sentiment clearly predominates.
To conclude, future fund flows will crucially depend on upcoming Federal Reserve communications and budget stability. The cryptocurrency market remains expectant, where a clarification on interest rates could revive demand or, otherwise, prolong the current financial bleeding.
