Digital asset investment products recorded outflows of $147 million last week amid increasing investor caution in response to robust economic data.
Stronger-than-expected economic indicators have diminished hopes for significant interest rate cuts, dampening market sentiment, according to a Monday report from CoinShares.
Despite the cautious atmosphere, trading volumes for exchange-traded products (ETPs) edged up by 15% to $10 billion, even as broader crypto markets experienced lower activity.
Canada and Switzerland Lead in Terms of Inflows
Geographically, investment trends varied. Canada and Switzerland led the inflow charge, attracting $43 million and $35 million, respectively.
In contrast, the United States, Germany, and Hong Kong faced significant outflows, with the U.S. seeing $209 million, Germany $8.3 million, and Hong Kong $7.3 million.
Digital asset investment products saw $147M in net outflows last week, ending a 3-week streak of positive inflows. CoinShares attributes this to higher-than-expected economic data shaking the markets. #Crypto #DigitalAssets #CoinShares #Investment pic.twitter.com/R23ShnmbeD
— Juan Henao (@juanhenao73) October 7, 2024
Bitcoin was at the center of investor movements, experiencing outflows of $159 million.
However, products that short Bitcoin saw modest inflows of $2.8 million, indicating some hedging activity.
Ethereum followed the broader negative trend, registering $29 million in outflows as interest in the asset waned.
On the positive side, multi-asset investment products continued their winning streak, drawing $29 million in inflows, marking the 16th consecutive week of positive trends.
Since June, these products have attracted $431 million, accounting for 10% of assets under management, appealing to investors seeking diversified exposure across various digital assets.
Uptober Narrative Appears to be Regaining Strength
After a rocky start, the “Uptober” narrative appears to be regaining strength, with Bitcoin stabilizing near levels seen last Monday, QCP Capital said in a recent note.
Strong Non-Farm Payroll (NFP) data and renewed interest from an upcoming HBO Bitcoin documentary have bolstered support around the $60,000 mark.
Even themed memecoins, inspired by Len Sassaman, are seeing increased attention.
Despite last week’s volatility, options flows suggest a positive outlook for the fourth quarter, with notable interest in December BTC call spreads targeting the $75,000 and $95,000 levels, pushing the “Uptober” narrative further.
Expectations of further rate cuts and Bitcoin’s strong correlation with equities contribute to the market’s optimistic stance for a strong October performance.
However, this week’s focus shifts to the U.S. Consumer Price Index (CPI) release on Thursday.
With recent solid wage and employment data, investors will scrutinize the report for any signs of inflation pressure.
The Federal Reserve’s rate cut expectations have shifted from 50 basis points to 25 basis points in just a week, and the upcoming CPI figures could influence future policy adjustments.
QCP also noted that last week saw sustained interest in BTC December call spreads.
The firm suggested that a potential strategy is a zero-cost Principal Protected Sharkfin with a maturity of December 27, 2024, targeting a strike of $75,000 and a barrier of $90,000, offering a maximum payout of 90% per annum if Bitcoin’s price stays just below $90,000 at expiry.
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