For the month of April 2022, the broader cryptocurrency market has remained largely choppy, with Bitcoin (BTC) and the overall crypto market both down by 10%. According to the most recent Bloomberg report, investor interest in Bitcoin is waning.
This is evident from a number of factors, including a decrease in online searches, fewer crypto transactions, and massive outflows from crypto funds. On the other hand, according to UBS research, April will see the largest crypto-ETF outflows, with investors withdrawing nearly half a billion dollars this month.
According to the Bloomberg report, the Purpose Bitcoin ETF alone has seen outflows of $220 million since the end of March 2022. According to James Malcolm, UBS’s head of foreign exchange and crypto research, in an interview with Bloomberg, “The vast majority of the population seem to have little interest in crypto because it’s too complicated, too volatile, and too strange. So in a sense, we’re stuck at the moment.”
Despite the Fed’s hawkish stance, crypto ETF outflows continue.
The Fed’s aggressive approach to controlling soaring inflation has cast a pall over fund flows into risk-on assets and crypto ETFs. Bitcoin is still trading 40% lower than its all-time high of $69,000, and this trend is expected to continue.
As investor interest remains subdued, aggregated trading volumes on crypto exchanges such as Kraken and Coinbase have declined. Furthermore, social media and Google searches for “Bitcoin” have decreased.
According to Malcolm of UBS, industry participants are waiting for regulatory clarity before resuming interest. However, if prices begin to rise again, he believes investors will return.
Malcolm said: “It either needs new people or it needs existing players to dedicate an increasingly large slice of resources to the industry”.
Analysts at Blockforce Capital, on the other hand, claim that a large number of Bitcoins have been moved into cold storage. The expansion of BTC’s illiquid supply has accelerated, which could be a good sign. The analysts wrote in a note to investors, “We have only seen this level of outflow from exchanges four previous times since the start of 2018. Three of those instances correlated with a sharp upward movement in price not too long after.”
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