This week, cryptocurrency investors withdrew $528 million from digital asset-based investment products, according to CoinShares' Digital Asset Inflows Report.
Cryptocurrencies have not escaped the current crisis that is engulfing financial markets, which has caused a sharp decline in the main risk assets around the world. In the case of cryptocurrencies, the investment firm CoinShares highlighted that investment products based on these digital assets began to register massive outflows of funds, after maintaining a streak of 4 consecutive weeks of positive inflows.
Fund outflows were concentrated in the United States
This week, cryptocurrencies have been hit hard by fears of a US recession, rising interest rates in Japan, geopolitical concerns and the broader market sell-offs that all this has caused across most risk asset classes.
According to data from the 194th Crypto Investment Fund Flows Report, Bitcoin has been the most affected cryptocurrency so far, with outflow volumes of $400 million into its listed investment products.
On the Ethereum side, investment products based on this cryptocurrency saw weekly outflows of $146 million, making it the second most affected crypto asset by the current market situation. Solana-based investment products also saw an outflow of $2,8 million this week, while those based on Litecoin and XRP saw light inflows of funds, between $200K and $400K.
Regionally, most of this week's fund outflows were recorded in the United States, followed by Hong Kong and Germany.
Source: CoinShares
Bitcoin price drops to $50K
The market-leading cryptocurrency is trading at around $50.000 per BTC at the time of writing. While Bitcoin has lost around 30% of its value over the past 7 days, CoinMarketCap data reflects a slight recovery in its price over the past hour.
Source: CoinMarketCap
According to on-chain data, the crypto market has lost 16%, or roughly $350.000 billion, of its market cap over the past 24 hours. Currently, the market cap of all existing digital assets stands at around $1,8 trillion.
On the other hand, cryptocurrency trading volumes exceed $310.000 billion in the last few hours, with USDT, BTC and ETH leading the crypto asset trading.
Japan raised interest rates by 15 basis points
Experts have commented that the fierce fall that cryptocurrency markets are experiencing has to do with the aggressive rise in interest rates by the Bank of Japan, which has put an end to the period of carry trade initiated by the United States in 2022, when the Federal Reserve began its cycle of interest rate hikes.
Now that Japan has changed the direction of its monetary policy, adjusting its interest rates by 15 basis points, the trend has naturally come to an end. carry trade, prompting a sell-off in risky assets. This adjustment has also led to the biggest falls in years in technology stocks.
Colin Wu, a Chinese journalist and writer for the Wu Blockchain newsletter, noted that despite the sharp setback that Japan's interest rate hike has caused in financial markets, the Japanese bank's moves appear to be motivated by its supportive relationship with the United States. “The Federal Reserve needs to find a reason to justify a rate cut, and that reason is actually the pullback in the US stock market. Therefore, the Bank of Japan's action can be understood as part of this policy coordination,” said. Therefore, despite the current situation, he stressed the importance of being patient and not letting panic influence financial decisions.
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