Investors Fret Over Interest Rates: Digital Asset Outflows Hit $206M

Bitcoin halving concerns triggered the 11th consecutive week of outflows from the blockchain equities.

According to data compiled by CoinShares, blockchain equities experienced $9 million in withdrawals as investors worried about halving the impact on mining companies because it can affect their profitability and, subsequently, the value of their investments in those firms.

The latest halving saw the mining reward slash to 3.125 BTC. If mining becomes less profitable as a result, it can lead to reduced revenue and potential financial struggles for mining operations, which in turn could affect the value of stocks in those companies.

Interest Wanes in Digital Asset Investments

Digital assets investment products recorded outflows for the second week in a row, totaling $206 million. CoinShares found that the trading volumes in ETPs slightly decreased to $18 billion, which now represents a smaller proportion of total Bitcoin volumes. This figure appears to be still increasing, at 28% compared to 55% a month ago.

The Singaporean asset manager’s report also suggests that interest from ETP/ETF investors is diminishing, possibly due to expectations that the Federal Reserve will maintain high interest rates for a longer period than anticipated.

As a result, Bitcoin experienced outflows of $192 million, but few investors viewed this as an opportunity to short-sell. Short positions in Bitcoin saw outflows of $0.3 million. Ethereum-related products also saw outflows of $34 million, marking its sixth consecutive week of outflows.

A similar trend was seen across Solana-based investment products, with an outflow of $0.3 million for the week. On the other hand, multi-asset investments saw improved sentiment with weekly inflows of $9 million.

Meanwhile, Litecoin and Chainlink experienced inflows of $3.2 million and $1.7 million, respectively, followed by Polkadot and XRP, with inflows of $1.5 million and $1.3 million during the same period.

Negative Sentiment Hits US ETFs

Regionally, the negative sentiment was mainly observed in US ETFs, which experienced outflows of $244 million. These outflows were concentrated on the incumbent ETFs, while newly issued ETFs continued to see inflows, though at noticeably lower levels compared to previous weeks. Germany also registered outflows of $8 million, followed by Sweden with $6.7 million over the past week.

On the other hand, Canada and Switzerland topped the weekly inflows chart with $30 million and US$8 million, respectively. Brazil, Australia, and France also experienced minor inflows of $5.5 million, $2.2 million, and $0.2 million respectively.