Bitcoin FOMC watch – Investors pull $600m from the crypto market

Investment products focused on digital assets have seen a significant outflow of $600 million. This is the largest since March 22, 2024, and is likely a result of a more hawkish-than-anticipated FOMC meeting. This has created a bearish trap in the BTC/USDT market.

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The crypto market is in the red today. The reason? FOMC market effects. The market has shed millions in losses, and investors have pulled back investments.  Due to recent outflows and a price sell-off, total assets under management (AUM) tanked from over $100 billion to $94 billion in just one week.

FOMC meeting triggers $600m crypto outflows

A significant amount of money, totaling $621 million, was withdrawn from Bitcoin (BTC). Investors are showing a bearish sentiment, resulting in $1.8 million flowing into short-Bitcoin products. This suggests that some investors are anticipating further price declines.

Trading volumes for the week are currently at US$11bn, which is lower compared to the weekly average of US$22bn this year. However, it is significantly higher than the US$2bn per week recorded last year. 

Digital asset exchange-traded products (ETPs) continue to hold a consistent 31% share of global trading volumes on reputable exchanges.

From a regional perspective, the United States experienced the highest outflows, amounting to a total of $565 million. However, it is important to highlight that the negative sentiment was not exclusively concentrated in the US. Canada, Switzerland, and Sweden experienced outflows of $15m, $24m, and $15m, respectively. Germany went against the norm and saw inflows of US$17m.

At the FOMC meeting on Wednesday last week, Powell announced that the current interest rates will remain unchanged at between 5.25% and 5.5%. He added, “Inflation has eased over the past year but remains elevated.” 

According to Fed Chair Jerome Powell, central bankers are currently monitoring the progress in reducing inflation before considering a rate cut.

Crypto markets see red

On Monday, markets witnessed the worst trading in 48 hours. Onchain data shows a bearish trap detected in the BTC/USDT market. The recent decline to $66K indicates an oversold crypto market present.

This decline appears to be a classic bearish trap aimed at shaking out inexperienced crypto traders. The oversold RSI suggests a potential rebound. Other than that, the majority of the crypto market is in the red.

Today, the value of Ethereum (ETH) stands at $3,521.05, reflecting a slight 0.7% increase within the last hour and a 2.3% decline in the last 24 hours. The current value of ETH is 4.5% lower than its value a week ago. Meanwhile, ether-based investment products avoided the trend, attracting $13 million in net inflows globally last week. 

In addition, Solana (SOL) is valued at $143.52, reflecting a 1.3% increase within the last hour and a 3.4% decline compared to the last 24 hours. The current value of SOL is 11.1% lower than its value 7 days ago.

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The current price of BNB is $605.78 per (BNB / USD), and its market cap is $89.40B USD. The trading volume for the past 24 hours stands at $1.71 billion USD.

Cryptopolitan reporting by Florence Muchai