The cryptocurrency market is currently in a state of losses, but the bleeding began last week as investors withdrew over $500 million from digital asset investment products such as exchange-traded funds (ETFs).
According to a report by asset management firm CoinShares on Monday, at least part of this was due to concerns about a US economic recession, as investors pulled out $528 million from funds involving digital currencies.
CoinShares stated that the popular spot Bitcoin ETF, which was approved in January this year, experienced the largest outflow of funds at $400 million. Investors had been injecting cash into these funds for five consecutive weeks prior to the sell-off.
CoinShares referred to this sell-off as a “response to concerns about a US economic recession, geopolitical concerns, and the broader market liquidation across most asset classes.”
At the time of writing, the trading price of Bitcoin was $54,458 per coin, with a 6% decline in the past 24 hours and nearly a 20% decline in the past 7 days according to CoinGecko. The other top 20 cryptocurrencies and tokens have also experienced losses in terms of market capitalization, marking one of the largest sell-offs so far this year.
CoinShares added in its report that investors withdrew $146 million from Ethereum ETFs. Last month, a newly approved Ethereum spot ETF began trading in the US.
The second-largest digital asset has been hit harder than Bitcoin, with its current price at $2,460, experiencing a 10% decline in the past 24 hours.
CoinShares also noted that cryptocurrency funds in Europe have also been hit by the sell-off, and investors have access to other digital currencies such as Solana.
Both the cryptocurrency market and US and Asian stock markets have been affected, as investors now believe that the Federal Reserve’s interest rate cut plans may be progressing too slowly. The US central bank hinted last week at a possible rate cut in September, with interest rates currently at their highest level in 23 years.
Combined with weak employment data and tension in the Middle East, this has led to investors selling off risky assets.
Andrew Hayward, Editor.