The United States is expected to launch a hawkish monetary policy, and nearly $100 million of funds have withdrawn from US cryptocurrency funds

According to CoinShares, institutional investors sold $101.5 million worth of digital asset products last week as they expected the Federal Reserve to adopt a hawkish monetary policy.

The U.S. inflation rate reached 8.6% year-on-year at the end of May, returning to levels not seen since 1981. As a result, markets expect the Fed to take significant action to curb inflation, with some traders predicting three more rate hikes of 0.5% each by October.

According to CoinShares’ latest weekly report on digital asset fund flows, the outflows between June 6 and June 10 were mainly from investors in the Americas, amounting to $98 million, while Europe accounted for only $2 million.

Products offering exposure to the top two assets in the crypto space — bitcoin and ethereum — accounted for nearly all of the outflows, at $56.8 million and $40.7 million, respectively. The data so far this month has also been grim, with outflows worth $91.1 million from BTC products and a total of $72.3 million from ETH products.

“What has pushed Bitcoin into a ‘crypto winter’ over the past 6 months can largely be explained as a direct result of increasingly hawkish rhetoric from the Federal Reserve.”

While CoinShares hinted that bitcoin has entered a crypto winter, inflows into bitcoin investment products have hit $450.8 million so far this year. In contrast, funds offering exposure to ethereum have seen massive outflows of $386.5 million so far this year, suggesting that institutional investors remain in favor of the digital gold.

The report also highlighted that as of last week, the total assets under management (AUM) of Ethereum funds had “fallen to $8.7 billion from a peak of $23 billion in November 2021.”

Notably, institutional investors appear to have dumped their BTC and ETH offerings ahead of the recent price crashes in both assets.

CoinGecko data shows that from June 6 to 10, BTC and ETH prices fell by 4.7% and 5.9%, respectively. But since June 11, BTC and ETH have plummeted around 25.7% and 33.2%, respectively.

In addition to the outflows of BTC and ETH, the outflow of multi-asset funds was US$4.7 million, and the outflow of Short Bitcoin products was US$200,000. Meanwhile, investors are also “avoiding accumulating altcoins.”

Fund Flows by Asset: CoinShares