Crypto products post $726M outflows amid rate cut uncertainty

Cryptocurrency investment products experienced another challenging week, with outflows amounting to $726 million, according to a recent report by CoinShares.

Following previous repeated weekly outflows, crypto investment products have matched the largest recorded outflow set since March 2024, CoinShares’ head of research, James Butterfill, wrote in the latest digital asset fund flows weekly report released on Sept. 9.

As previously mentioned by CoinShares, crypto products saw record weekly outflows during the week from March 17 to March 23, shedding a total of $942 million.

Weekly crypto asset flows. Source: CoinShares

In the past week, Bitcoin ( BTC )-based crypto investment products saw outflows totaling $643 million. Ethereum saw outflows totaling $98 million, while Solana saw the largest inflows of any asset, totaling $6.2 million.

Potential 25 bp interest rate cut versus 50 bp cut: Impact on the crypto market

The ongoing selling pressure comes in line with the negative sentiment driven by stronger-than-expected macroeconomic data in the United States from the previous week, which increased the likelihood of a 25 basis point (bp) interest rate cut.

Daily outflows subsequently slowed amid the weak US employment data, which triggered anticipation that the US Federal Reserve would opt for a potential 50 bp rate cut.

“The markets are now awaiting Tuesday’s Consumer Price Index inflation report, with a 50 bp cut more likely if inflation comes in below expectations,” Butterfill wrote.

According to 21Shares analyst Leena ElDeeb, the recent US labor market results acted as a “moment of truth” for risk-on assets like Bitcoin.

“A rate cut bodes well for risk-on assets which have historically enjoyed the expansion of the investor appetite as borrowing costs decrease,” ElDeeb told Cointelegraph, adding that other catalysts may point for Bitcoin’s potential breakout.

Related: Bitcoin ETFs record combined $1.2B in outflows in 8 days

One such catalyst is global central bank liquidity, measured by M2. “Historically, Bitcoin tends to bottom out shortly before global M2 reaches its low, followed by a rapid price surge that often outpaces liquidity growth,” ElDeeb stated.

Bitcoin price vs. global liquidity (M2). Source: Bitcoin Magazine Pro

Coinbase posted worst week in 2024 as crypto stocks tumble  

Apart from the massive selling of crypto products, the ongoing sell-off in crypto can also be seen in the crypto stock market.

According to a report by CNBC, Coinbase (COIN) shares posted their worst week in 2024, with the stock plummeting to its lowest value since February. According to data from TradingView, COIN closed at $147 on Sept. 6. The stock is down around 14% year-to-date.

Coinbase price chart year-to-date. Source: TradingView

According to CNBC, several major Bitcoin mining companies also ended the week with double-digit drops, led by CleanSpark’s 24% decline.

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