Digital asset investment products posted their largest outflows since March, with $1.43 billion exiting the market last week as investors reacted to mixed signals on U.S. monetary policy. Trading volumes in exchange-traded products surged to $38 billion, about 50% above the yearly average, underscoring heightened investor uncertainty.
Fed Policy Concerns Drive Early Losses
Outflows were heaviest early in the week, totalling $2 billion, as investors positioned against expectations that the Federal Reserve would maintain a restrictive policy stance. Concerns over persistent inflation and higher-for-longer interest rates weighed on sentiment, prompting withdrawals across major digital assets.
The outlook shifted later in the week following Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Symposium. Powell’s remarks were interpreted by markets as more cautious than expected, sparking renewed optimism and inflows of roughly $594 million into digital asset products by week’s end.
Ethereum Recovers, Bitcoin Struggles
Ethereum was more resilient than Bitcoin during the turbulent week. Outflows for Ethereum were limited to $440 million, aided by a mid-week recovery following Powell’s address. By contrast, Bitcoin recorded $1 billion in net outflows.
The divergence between the two leading assets has become more pronounced in recent weeks. Month-to-date, Ethereum has attracted $2.5 billion in inflows, while Bitcoin has seen net withdrawals of $1 billion. Ethereum’s year-to-date inflows now account for 26% of total assets under management in digital products, compared to just 11% for Bitcoin.
Altcoin Performance Mixed
Smaller cryptocurrencies experienced mixed investor flows. XRP led altcoin inflows with $25 million, followed by Solana at $12 million and Cronos at $4.4 million. On the other hand, Sui and Ton recorded the steepest outflows, with $12.9 million and $1.5 million, respectively.
Analysts say the contrasting flows reflect a growing polarisation among investors over the path of U.S. monetary policy and its impact on risk assets. While the dovish interpretation of Powell’s remarks provided some relief, overall sentiment remains cautious as markets await further economic data and policy signals.
