Crypto products hit with $305M outflow amid strong US economic data

After seeing the largest multi-week inflows in recent months, cryptocurrency investment products are back to seeing major outflows amid strong economic reports in the United States.

Digital asset investment products saw outflows totaling $305 million last week, driven by “stronger-than-expected economic data” in the US, CoinShares stated in its latest digital asset fund flows report published on Sept. 2.

The report suggests that during the week from Aug. 24 to Aug. 31, US investors led the world in terms of the number of crypto investment products sold, with outflows totaling $318 million.

Germany and Sweden posted smaller outflows totaling $7.3 million and $4.3 million, respectively. On the other hand, Switzerland and Canada saw slight inflows totaling $5.5 million and $13.2 million, respectively.

Why is the US spending data so important in the context of crypto outflows last week?

The US Commerce Department reported on Aug. 30 that the Personal Consumption Expenditures (PCE) price index surged 0.2% on the month and was also up 2.5% from the same period last year.

As consumer spending is seen as the key driver of economic growth in the US, the PCE is considered as one of the preferred measures of inflation by the US Federal Reserve, which is anticipated to enact its first interest rate reduction in more than four years.

The report came amid anticipated market rate cuts in September. The PCE report hinted at a 24 basis point reduction and lowered the probability of a 50 basis point cut. 

“We continue to expect the asset class to become increasingly sensitive to interest rate expectations as the Fed gets closer to a pivot,” CoinShares noted in its latest report.

Bitcoin leads the negative sentiment, with $319 million in outflows

According to the latest report from CoinShares, Bitcoin-based investment products suffered the biggest outflows last week, seeing $319 million in outflows.

At the same time, short Bitcoin investment products saw a second consecutive week of inflows totaling $4.4 million, the largest since March 2024.

Related: Fed’s ‘sugar high’ may propel Bitcoin surge — Arthur Hayes

Crypto investment products on Ethereum saw $5.7 million outflows, continuing the falling trend despite the recent launch of Ethereum exchange-traded funds (ETF) in the US on July 23, 2024.

“Blockchain equities bucked the trend, seeing $11m inflows, notably into Bitcoin miner-specific investment products,” the report noted.

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