In recent weeks, the exchange-traded Bitcoin ETF in the US and other cryptocurrencies worldwide have seen a decline in inflows, totaling $1.2 billion (€1.12 billion) according to market research firm CoinShares. This outflow has had a significant impact on the overall crypto market, particularly for Bitcoin.
On Tuesday, many investors took advantage of the lower price to enter the crypto market, causing the Bitcoin price to temporarily rise above $62,000 again. However, this temporary rise was short-lived as investors’ pessimism about potential interest rate cuts by the US Federal Reserve continued to dominate the market.
The negative sentiment in the crypto market is driven by investors’ concerns about when and to what extent the central bank might adjust its monetary policy. While interest rates remain high, investors have other profitable investment options available to them, which has contributed to a downturn in the crypto market. However, if interest rates on traditional investments decrease, cryptocurrencies may become more attractive to investors.
Despite this negative sentiment, researchers at CoinShares do not expect a sustained slump in Bitcoin in the medium to long term. This is because there has been no increase in short positions betting on a falling Bitcoin price among investors.
Ether on Ethereum blockchain has also experienced outflows of $58 million and has shared overall negative sentiment with other cryptocurrencies in the market.
