Crypto inflows contracted to $223 million last week, cutting short the potential to reach $1 billion after the trajectory earlier in the week had made it possible.
It followed a series of US economic signals, including the FOMC, with macro data coming in better than expected.
Crypto Inflows Near $1 Billion but Macro Data Reversed Trend to $223 Million
The latest CoinShares report shows crypto inflows reached $883 million during the first part of the week, steadily approaching the $1 billion threshold.
However, after the FOMC meeting on Wednesday, inflows into digital asset investment programs retracted, closing the week at just $223 million.
CoinShares head of research James Butterfill ascribes the retraction to US economic signals last week, citing FOMC and other macro data.
“The week started strong, with US$883m in inflows, but this trend reversed in the latter half of the week, likely triggered by the hawkish FOMC meeting and a series of better-than-expected economic data from the US,” read an excerpt in the latest blog.
More closely, weak payrolls data at the end of the week had dovish connotations for the Federal Reserve (Fed).
As it happened, US job cut announcements jumped above the 4-year average, more than doubling the average July job cut number. This backdrop suggested weakening labor market data, which could influence the Fed to cut interest rates.
The turnout inspired a general risk-off sentiment, provoking crypto outflows, with $1 billion in negative flows recorded on Friday alone. BeInCrypto also reported the gap in US employment data, exacerbating the impact.
Nevertheless, Butterfill also associates the drop in crypto inflows with profit-taking after the recent market rally, with investors cashing in for early gains.
“Given we have seen $12.2 billion net inflows over the last 30 days representing 50% of inflows for the year so far, it is perhaps understandable to see what we believe to be minor profit taking,” wrote Butterfill.
Meanwhile, last week’s crypto inflows mark a significant drop compared to the numbers recorded the week ending July 26.
As BeInCrypto reported, crypto inflows approached the $2 billion mark that week, with Ethereum outshining Bitcoin in an altcoin-led rally.
Ethereum Extends Lead Against Bitcoin as Altcoins Charge
Interestingly, Ethereum continues to watch Bitcoin from the rear-view mirror, managing $133.9 million in positive flows. Solana and XRP also did well, recording $8.8 million and $31.3 million in positive flows, respectively.
Conversely, Bitcoin bucked the trend, registering $404 million in outflows or negative flows. This more than doubled the outflows seen in the week before the last, when BTC flows were negative $175 million.
Crypto Inflows Last Week. Source: CoinShares Report
Elsewhere, analysts at QCP Capital highlight Bitcoin’s third consecutive Friday sell-off, pointing to risk-off sentiment in traditional markets.
“… [ this was] driven by a confluence of factors: a weaker than expected US jobs report and a fresh round of tariffs from Washington,” wrote analysts at QCP Capital.
Based on this, the current lull in the market may be associated with investors recalibrating expectations around global growth and liquidity.
According to QCP analysts, this could influence the runway to the much-awaited altcoin season, causing a delay but not entirely writing it off.
“…despite the pullback, the broader structural setup remains intact,” the analysts added.
The recent pullback may have been a post-rally shakeout, flushing out excess leverage and potentially setting the tone for renewed accumulation.
