Investor flight

Crypto assets worth billions sold

Over USD 1.2 billion has been withdrawn from exchange-traded Bitcoin ETFs in the US and other crypto assets worldwide in the past two weeks. The outflow caused a downward trend, especially for Bitcoin. The market is pessimistic about US interest rate cuts.

On Monday, the price of the digital asset Bitcoin on the Bitstamp platform temporarily plummeted to just under USD 59,700 - its lowest level since the beginning of May. On Tuesday, however, a number of investors took advantage of the comparatively low price to enter the crypto market. The Bitcoin price temporarily rose back above 61,000 dollars.

Market researchers at CoinShares attribute the overall poor sentiment on the crypto market to investor pessimism regarding interest rate cuts by the US central bank, the Fed, this year. It is currently unclear when and to what extent the Fed might ease its monetary policy.

The calculation here is that as long as interest rates remain comparatively high, investors have many options for investing their money profitably. The crypto market then suffers as a result. If, on the other hand, interest rates for traditional investments fall, crypto investments appear more attractive.

Short-term slump
The recent outflows from the crypto market have focused on Bitcoin. Here, investors withdrew a total of 630 million dollars in the past two weeks.

However, according to CoinShares researchers, the market is not expecting a prolonged Bitcoin slump in the medium to long term. Despite the recent negative sentiment, investors have not increased their short positions, i.e. their financial bets on a falling Bitcoin price.

Ether, the second most important cryptocurrency on the Ethereum blockchain, also failed to escape the negative sentiment and recorded outflows of USD 58 million.