U.S. Bitcoin exchange-traded funds experienced a tough week. They recorded institutional outflows totaling $946 million, according to a new report from digital asset manager CoinShares. The iShares Bitcoin Trust (IBIT) was the hardest hit, with approximately $400 million in withdrawals. This situation occurred after a hawkish tone from the Federal Reserve. Despite this, total net outflows for all funds tracking digital assets were a less dramatic $360 million.
James Butterfill, CoinShares Director of Research, explained the situation. Digital asset investment products saw outflows totaling $360 million last week. This was despite the recent U.S. interest rate cut. Investors interpreted Fed Chair Jerome Powell’s comments on the likelihood of another cut in December as “not a foregone conclusion.” This hawkish tone from the Fed, combined with a notable absence of key U.S. economic data releases, appears to have left investors in a state of limbo.
The losses in Bitcoin ETF outflows were partially offset by ETF gains in other regions. Funds from issuers in Germany and Switzerland had net inflows of over $30 million last week. Additionally, Canadian and Australian issuers generated $8.5 million and $7.2 million worth of inflows, respectively. This demonstrates geographical diversification in the market’s reaction to macroeconomic events.
Why does optimism for Solana contrast with caution towards Bitcoin?
The overall crypto fund category received an unusually high boost. This was particularly due to inflows into Solana exchange-traded products. Investors poured $421 million into SOL-based ETFs last week. This flow was driven by hype for the new U.S.-based funds that started trading in late October. For example, the Bitwise Solana ETF (BSOL), launched a week ago, has already reached $105 million in assets under management.
In contrast, a competitor, the Rex-Osprey Solana Staking ETF (SSK), took 12 trading days to reach $100 million in AUM. The scarcity of U.S. economic data is due to the ongoing government shutdown. This has lasted for more than 33 days and is shaping up to be the longest in the country’s history. On the Myriad prediction market, users believe there is a 97% chance that lawmakers will not end the shutdown in the next two days.
Crypto markets tumbled Monday morning. This forced the liquidation of over $1 billion worth of crypto contracts. Bitcoin and Ethereum were almost tied in liquidations, with $312 million and $303 million in closed contracts, respectively. As of this writing, Bitcoin was trading at $107,463, down 2.5% over the past day. Ethereum was trading at $3,657.77, approximately 5.1% lower than the previous Sunday. The global economy and Fed decisions have a direct impact on the volatility of digital assets.
