Crypto Investment Product AUM Declines After Hawkish FOMC Meeting

Last week, the assets under management (AUM) for crypto investment products experienced a significant decline. This drop followed a hawkish Federal Open Market Committee (FOMC) meeting and a short-term macroeconomic outlook that left investors wary of risk assets.

CoinShares reported a $600 million net outflow from crypto vehicles, including U.S. Bitcoin (BTC) ETFs. The FOMC meeting had a notable impact on investor confidence. Trading volumes fell sharply from their weekly average of $22 billion to $11 billion, marking the most significant capital outflow in over three months and ending a 20-day inflow streak for spot BTC ETFs on Wall Street.

Bitcoin was particularly affected by macroeconomic factors and FOMC data. Investment products tied to Bitcoin saw the largest outflows, with the cryptocurrency itself losing over 6% over the week, according to TradingView.

At press time, BTC was trading below $65,500, having previously approached $70,000 earlier in the week.

In contrast, altcoins showed a different trend. Ethereum (ETH) led the market with $13 million in inflows, drawing capital while Bitcoin products saw outflows.

Crypto Markets Lull Despite Cooling Inflation

Last week, the FOMC maintained its funding rates within a 5.25% to 5.50% range. Although the Fed’s dot plot suggests a single interest rate cut this year, monthly and annual inflation data indicated an improved market environment.

The U.S. Consumer Price Index (CPI) remained flat last month, with year-on-year numbers falling to 3.4% from 3.6% in April. These levels are still below the Fed’s 2% target. However, the cooling inflation data could benefit risk assets like cryptocurrencies, potentially encouraging capital deployment ahead of a rate cut anticipated by September.

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