Last week, Bitcoin and Ethereum investment products witnessed significant outflows, losing up to $430 million, as investors expressed concerns about U.S. monetary policy. This is the first time this year that the cryptocurrency market has faced such large capital withdrawals.
Main Reason: Statement from the Fed Chairman
The capital withdrawal is concentrated on Bitcoin investment products such as #SpotETF , when the Chairman of the Federal Reserve of the United States (#Fed ) Jerome Powell stated that there is no rush to cut interest rates. This message has made investors concerned and intensified the sell-off of Bitcoin, causing the value of this cryptocurrency to decrease by 1.4% over the past week, fluctuating from $94,900 to $98,600 before closing at $96,900.
High Inflation Puts Pressure on the Market
The latest inflation report shows inflation rising by 3% over the past 12 months, while the core inflation index (excluding food and energy prices) increased by 5.5%. This has led the market to dismiss the possibility that the Fed will cut interest rates in the upcoming March meeting. Even the chance of an interest rate cut in July is now only 45%.
Altcoins Still Attract Investment
Although Bitcoin is experiencing significant capital outflows, altcoins such as $SOL , $XRP , $SUI are still attracting stable investment flows, helping to reduce the total capital withdrawn from digital asset investment funds to $415 million.
Market Outlook
Although the current situation seems bleak, experts assess that the market's reaction is relatively 'mild' compared to the backdrop of rising inflation. Furthermore, Bitcoin has still attracted large capital flows since the beginning of the year, reaching $5.5 billion, accounting for 80% of the total capital inflow into digital asset investment products.
Risk Warning
Investing in the cryptocurrency market always carries a high risk and is not suitable for every investor. Investors need to consider carefully and manage risks effectively before making any investment decisions.
