Crypto market faces significant downward pressure with record-breaking outflows from digital asset investment products.
Despite President Donald Trump's stance on crypto reserves, Bitcoin struggles to maintain levels above $90,000, reflecting the prevailing negative sentiment in the market.
In a surprising turn of events, crypto outflows have skyrocketed to $2.9 billion in the past week, pushing the three-week total to a staggering $3.8 billion. This marks the third consecutive week of capital flight from the crypto sector, contrasting sharply with the previous 19-week inflow streak that injected $29 billion into the market.
According to the latest report from CoinShares, weakening sentiment in the crypto market is the primary culprit behind the massive outflows. Factors such as the recent Bybit hack, a more hawkish Federal Reserve stance, and broader macroeconomic uncertainties have all contributed to this trend.
The hack, which resulted in significant financial losses, has rattled investors and raised concerns about security vulnerabilities within the crypto space. Additionally, the Federal Reserve's cautious comments on inflation and the US GDP have added to market uncertainties, dampening risk appetite.
Bitcoin bore the brunt of bearish sentiment, witnessing outflows of $2.59 billion last week, while Ethereum also experienced its highest weekly outflows at $300 million. Other major altcoins like Solana also saw significant outflows.
Despite the overall negative sentiment, some digital assets managed to attract inflows. Projects like Sui and XRP garnered investor interest, indicating pockets of resilience within the market.
For XRP, optimism remains high as investors await a decision from the US Securities and Exchange Commission on an XRP ETF application. This potential clarity in regulation could further boost sentiment towards XRP and potentially influence its inclusion in Trump's proposed crypto reserve.
The recent outflows are part of a troubling trend that has emerged in recent months. Previous weeks had already witnessed substantial outflows, fueled by macroeconomic factors and external policies that have clouded the market outlook.
While the market sentiment remains in flux, Bitcoin's price has shown some resilience, trading at $93,095 at the time of writing, signaling a modest increase since the week's opening.
The evolving dynamics in the crypto market underscore the need for cautious monitoring and strategic positioning as investors navigate through uncertain waters.