Hawkish Fed Signals Dampen Inflows to Crypto Funds

Between December 15 and 21, cryptocurrency investment funds received $308 million, a sharp decline from the $3.2 billion the previous week, according to CoinShares. 

The trend was overshadowed by the largest daily outflow since mid-2022, amounting to $576 million on December 19, following the Federal Reserve’s hawkish rate cut.

At a press conference, Fed Chair Jerome Powell cautioned that the regulator would take a more cautious approach to easing policy in the future.

Along with the following day, investors reduced their positions in crypto products by approximately $1 billion. Nonetheless, this was insufficient to offset the inflows from the previous three days.

Year-to-date inflows reached a record $44.8 billion. 

The volume of assets under management fell from a record $167.4 billion to $157.3 billion amid market correction.

Over the past week, investors added $274 million to instruments based on the first cryptocurrency (previously $2 billion), with $39 billion added since the beginning of the year.

Clients directed $0.4 million ($14.6 million) into structures allowing short positions on digital gold.

Inflows into Ethereum funds slowed from $1.09 billion to $51.3 million, continuing a positive trend for the eighth consecutive week.

Investors also put $8.8 million into XRP instruments following a record $145.8 million.

Clients withdrew $8.7 million ($1.7 million) from Solana-based products.

Inflows into funds based on Horizen and Polkadot amounted to $4.8 million and $1.9 million, respectively.

Earlier, Santiment predicted Bitcoin’s return to its peak due to rising FUD sentiment.

Bitfinex forecasted the peak of the first cryptocurrency’s bull market in the third to fourth quarters of 2025, with a target price of $200,000. Bitwise pointed to the same level.

Previously, K33 Research highlighted a high probability of a bull run peak forming on January 17.