Crypto Funds Lose $360 Million Despite Fed Rate Cut

Crypto funds saw a $360 million outflow despite Fed rate cut.

Between October 27 and 31, there was an outflow of $360 million from cryptocurrency-based investment products, according to a report by CoinShares.

On October 29, the U.S. Federal Reserve (Fed) reduced the key interest rate by 25 basis points to 3.75-4% for the second consecutive time. However, markets remained uncertain following a statement by Fed Chair Jerome Powell, indicating that a similar move in December was not yet “predetermined,” noted James Butterfill, head of research at CoinShares.

At the time of writing, the probability of the Fed further reducing the rate range to 3.5-3.75% is estimated at 70% (CME FedWatch).

Regionally, negative investor sentiment was most pronounced in the U.S., where weekly outflows from crypto funds reached $439 million. These losses were partially offset by inflows into products registered in Germany and Switzerland, amounting to $32 million and $30.8 million, respectively.

Bitcoin funds were the only ones to experience significant capital loss, with investors withdrawing $946 million. According to Butterfill, this trend underscores that among major cryptocurrencies, digital gold remains the most sensitive to changes in U.S. monetary policy.

Inflows into Solana-based funds reached $421 million, marking the second-highest figure in recorded history. Most of the capital was directed towards newly launched spot SOL-ETFs. 

Ethereum products saw inflows of $57.6 million over the week. However, daily dynamics indicated mixed investor sentiment, Butterfill highlighted.

Back in the week of October 17 to 24, inflows into cryptocurrency funds amounted to $921 million.