Crypto funds see $206 million in weekly outflows as investors 'fret' over interest rates: CoinShares

Crypto investment products at asset managers such as Ark Invest, Bitwise, Fidelity, Grayscale, ProShares and 21Shares registered a second-consecutive week of outflows totaling $206 million globally last week, according to CoinShares' latest report.

"The data suggests appetite from ETP/ETF investors continues to wane, likely off the back of expectations that the FED is likely to keep interest rates at these high levels for longer than expected," CoinShares Head of Research James Butterfill wrote . 

Last week's trading volume for global exchange-traded products also fell slightly to $18 billion, representing 28% of total bitcoin trading volume compared to 55% a month ago, Butterfill added — when daily bitcoin exchange-traded fund volume hit a peak of nearly $10 billion.

 

U.S. spot bitcoin ETFs led net weekly outflows

The U.S. spot bitcoin ETFs contributed significantly to the global weekly figure, with net outflows of $204.3 million leaving the funds last week, following the $82.5 million net outflows in the week prior.

 

BlackRock's IBIT was the only spot bitcoin ETF to maintain inflows every day last week, bringing in a total of $165.4 million to extend its inflow streak to 69 days ahead of the bitcoin halving on Friday.

"Waking up on 4/20 to see IBIT took in cash for the 69th straight day, which was also the halving. It's a little too perfect," Bloomberg ETF analyst Eric Balchunas said .

 

Adding crypto futures products, the U.S. saw $244 million in total net outflows last week, while Canada and Switzerland-based funds saw net inflows of $30 million and $8 million, respectively.

Global bitcoin funds accounted for $192 million of the total net weekly outflows. However, "few investors saw this as an opportunity to short," Butterfill said, with short-bitcoin products seeing $0.3 million in outflows.

Meanwhile, ether-based investment vehicles continued their outflow streak for a sixth consecutive week, seeing $34 million exit the funds. Litecoin and Chainlink products bucked the trend, generating inflows of $3.2 million and $1.7 million, respectively.

Blockchain equities also slumped to an eleventh consecutive week of outflows totaling $9 million amid concerns over the impact of the halving on the Bitcoin BTC +0.73% mining industry.

What's next for Bitcoin miners post-halving?

Bitcoin's fourth halving occurred at around 0:09 a.m. UTC on April 20 (8:09 p.m. ET on April 19), reducing miners' block subsidy rewards from 6.25 BTC to 3.125 BTC.

In an earlier report , published to coincide with the halving on Friday, CoinShares found that the average production cost per bitcoin among listed mining companies was around $53,000 post-halving.

The analysts forecast Bitcoin's total hash rate to rise to 700 EH/s by 2025, though they suggest it could temporary fall of up to 10% post-halving as less efficient operations start to switch off.

 

CoinShares also projected the hash price to fall to $0.053 TH/s per day. Hash price is a term coined by Luxor quantifying how much a miner can expect to earn from a specific hash rate.

 

Additionally, CoinShares' analysts expect diversification toward AI, given its potential to generate higher revenues, noting that companies such as BitDigital, Hive and Hut 8 are already generating income from AI. "This trend suggests that Bitcoin mining may increasingly move to stranded energy sites while investment in AI grows at more stable locations." they said.