Crypto Investment Funds Record $812 Million in Outflow

Global crypto investment products, including those from major companies such as Bitwise, Grayscale, Fidelity Investments, BlackRock, and 21Shares, experienced a huge outflow of $812 million last week. According to CoinShares data, the outflow indicates ongoing investor uncertainty despite better U.S. interest rate cut prospects.

James Butterfill, Head of Research at CoinShares, also affirmed that stronger-than-expected economic data from the United States failed to boost market sentiment. This highlights increased caution among digital asset investors. 

United States Takes the Biggest Hit

It is worth noting that most withdrawals came from the United States, where investors pulled $1 billion. 

However, Switzerland, Canada, and Germany saw inflows of $126.8 million, $58.6 million, and $35.5 million, respectively. This suggests that investors in these countries show more confidence in digital assets.

Despite the outflows, the month-to-date inflows remain at $4 billion, while the year-to-date inflows also sit at $39.6 billion.  Bitcoin (BTC) also experienced a withdrawal of $719 million last week. Similarly, Ethereum (ETH) recorded outflows of $409.4 million.

Solana (SOL), XRP, and Sui also gained notable inflows of $291 million, $93.1 million, and $2.9 million, respectively. This highlights the growing interest of some investors in certain digital currencies.

Fed Speech Turns Crypto Funds Outflow Into Fresh Inflows

Recall that in August, crypto funds faced a turbulent shift. As reported by TheCoinRise, outflows hit $1.43 billion, marking the steepest withdrawals since March. Yet, at the same time, investors were unusually active.

Reportedly, investors were initially worried that the U.S. Federal Reserve might take a tougher stance on interest rates. Fear of tighter policy drove nearly $2 billion out of the crypto market in just a few days. However, things changed after Fed Chair Jerome Powell spoke at the Jackson Hole meeting.

His comments were softer than expected, which lifted confidence and brought nearly $600 million back into crypto later in the month. This really shows how quickly investors’ sentiment can turn around. Around the same time, spot Bitcoin and Ether ETFs registered significant outflows. The outflows coincided with the release of fresh U.S. inflation data.

Adoption Outlook and Long-Term Growth

Meanwhile, amid the market’s short-term swings, longer-term adoption trends remain strong. Former hedge fund manager and macro investor Raoul Pal projected that global crypto users could reach 4 billion in 2030.

Pal compared the growth of crypto adoption with the internet trajectory. He noted that the crypto user base has grown by 137% over the past nine years. He also expects crypto adoption to moderate to a 43% growth rate next year.