Stagflation panic triggers a massacre of digital assets, with cryptocurrency seeing capital outflows for the third consecutive week
Recently, the digital asset market has been in a continuous downturn, with capital outflows from cryptocurrency investment products for the third consecutive week. Inflation stagnation in the United States has caused panic, with GDP growth slowing down and inflation indicators rising, weakening the possibility of a Fed rate cut. Investors withdrew $435 million from digital asset products, with the Grayscale Bitcoin Trust Fund experiencing the most outflows. Overall, capital inflows into the digital asset market have reached a record $13.6 billion so far this year. Bitcoin and Ethereum have become the main targets of capital outflows
According to the Zhitong Finance and Economics APP, due to renewed concerns about stagflation in the United States, the digital asset market has been in a continuous downturn recently, with capital outflows from cryptocurrency investment products for the third consecutive week.
It is understood that last week's U.S. GDP report showed that after a 3.4% growth in the previous quarter, the annualized growth rate for the first quarter of this year dropped to 1.6%. At the same time, the key inflation indicator PCE index of the Federal Reserve showed that the annualized inflation rate for the first three months of this year rose from 1.8% in the last quarter of 2023 to 3.4%.
The slowdown in GDP growth coupled with increasing inflation stickiness has once again raised the possibility of stagflation in the market, further weakening the possibility of a Fed rate cut. In the betting market on Polymarket regarding the Fed's monetary policy, most traders now believe that there is a 35% chance of no rate cut this year, a significant increase from 26% a week ago.
CoinDesk analyst Omkar Godbole stated that the key to the continued bull market in Bitcoin is the quarterly refunding announcement to be released by the U.S. Treasury Department, which will outline the borrowing needs of the U.S. government for the first quarter and the balance held in the Treasury's general account, potentially indicating the direction of the U.S.'s fiscal policy going forward.
According to a report released by CoinShares Ltd on Monday, investors withdrew $435 million from digital asset products in the week ending April 26. The outflow from the Grayscale Bitcoin Trust reached $440 million, accounting for the majority of the overall capital outflow, and also marking the smallest outflow for the fund in recent weeks.
The most severe capital outflows in the U.S. market amounted to $388 million. Overall, capital inflows this year have reached a record $13.6 billion.
The report points out that ETP trading volume decreased from $18 billion in the previous week to $11.8 billion, while the price of Bitcoin fell by 6%. As of the time of writing, Bitcoin has fallen by about 1% to $63,620.
Capital outflows are mainly concentrated in Bitcoin and Ethereum, amounting to $423 million and $38 million, respectively. In contrast, altcoins and multi-currency investments saw an inflow of $7 million The inflows of funds for other "regulars" such as Solana, Litecoin, and Chainlink were $4 million, $3 million, and $2.8 million respectively.
It is worth mentioning that Hong Kong launched its first spot cryptocurrency ETF yesterday and officially listed on the Hong Kong Stock Exchange today. Analysts expect that the assets under management of Hong Kong spot Bitcoin and Ethereum ETFs could reach $1 billion in the future, but whether this goal can be achieved may depend on the speed of infrastructure and ecosystem improvements