Last week, a sum of $206 million was withdrawn from investment funds specializing in cryptocurrencies, making it the second consecutive week with outflows. In contrast, alternative coins such as $LINK, $DOT, $XRP, and $ADA experienced notable inflows.
Based on CoinShares’ recent Digital Asset Fund Flows report, there were weekly inflows of $8.55 million into cryptocurrency investment products that hold multiple digital currencies. Additionally, investors put $3.2 million into funds concentrating on Litecoin ($LTC), which is sometimes called the “silver” in relation to Bitcoin‘s “gold.”
In a comparable manner, investments linked to Chainlink and Polkadot attracted $1.73 million and $1.45 million in investments, respectively. Meanwhile, funds associated with Avalanche, XRP, and Algorand saw inflows amounting to $1.43 million, $1.33 million, and $1.04 million, respectively.
Products centered around Cardano experienced inflows under $1 million, while Bitcoin Cash, Solana, and Short Bitcoin products had outflows exceeding $300,000 individually. In simpler terms, less than a million dollars worth of investments went into Cardano-related products, but Bitcoin Cash, Solana, and Short Bitcoin products saw over $300,000 in withdrawals each.
Instead, there were withdrawals of $32.2 million from Ethereum-centric investment products, while Bitcoin-exposed products experienced withdrawals totaling $192.33 million. As investors grew wary, they pulled their funds from the cryptocurrency market due to heightened fears that the Federal Reserve would maintain higher interest rates for a longer period than initially anticipated.
The report indicates that the total trading volume for these items decreased slightly to reach approximately $18 billion.
Experts believe that the decline in investor appetite for Exchange-Traded Products (ETPs), specifically those linked to Bitcoin, might be due to the Federal Reserve’s firm stance on increasing interest rates. The anticipation of extended periods with high-interest rates may diminish investors’ excitement towards riskier assets such as digital currencies.
At the present moment, the scarcity of Bitcoin may significantly increase as its availability on centralized cryptocurrency exchanges is about to decrease, possibly triggering a surge in price. Furthermore, following the upcoming halving event, Bitcoin’s scarcity will be equivalent to that of gold. Bybit’s recent report indicates that within the next nine months, the total supply of Bitcoin on these exchanges could reach its end, potentially causing a short squeeze.
Approximately 2 million Bitcoins remain on cryptocurrency exchanges. With an estimated $500 million in daily inflows from Bitcoin spot ETFs, approximately 7,142 BTC will be withdrawn from exchange reserves each day.
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2024-04-23 04:36