Crypto Investments Experience $147 Million Outflow as Strong U.S. Economy Shifts Sentiment

Last week, crypto investments saw outflows of $147 million. This marked a break in the positive trend that had been ongoing since September 9. Investors are reacting to signs of a strong U.S. economy, which have changed expectations about significant rate cuts from the Federal Reserve.

The latest report from CoinShares shows that digital asset investments faced outflows of $147 million. Bitcoin led the way, with $159 million in outflows. Ethereum (ETH) also experienced outflows of $28.9 million. The report indicates that the U.S. was the primary driver behind these outflows, linking the shift in sentiment to favorable economic data.

According to the report, “Digital asset investment products saw minor outflows totaling $147 million last week. Higher than expected economic data last week, reducing the probabilities for significant rate cuts, are the likely reason for the weaker sentiment amongst investors.”

A key highlight was the positive jobs report released on Friday. The U.S. economy added 254,000 non-farm payroll jobs in September, nearly doubling August's 142,000. This figure exceeded economists’ predictions, who expected around 140,000 jobs. The unemployment rate also dropped to 4.1%, better than the anticipated 4.2%. Strong job growth and rising wages suggest a tightening labor market, which could increase inflationary pressures.

These economic reports have put U.S. job data back in the spotlight as the Federal Reserve considers its next interest rate decision. The Fed aims for maximum sustainable employment and price stability. The CME FedWatch Tool currently shows an 86.3% chance of a 50 basis point (0.5%) rate cut, compared to a 13.7% chance for a 25 basis point cut. After the last reduction, the market expects another significant policy adjustment to tackle economic challenges.

Traders should keep an eye on additional signals from the Fed and key economic indicators this week. Important data like the Consumer Price Index (CPI), Producer Price Index (PPI), and initial jobless claims are coming up. If these numbers suggest a strengthening economy, the odds for a 25 basis point rate cut in November could increase.

While Bitcoin and Ethereum faced negative outflows, multi-asset investment products continued their streak, reaching 16 consecutive weeks of inflows with a total of $29 million last week. This ongoing interest comes amid mixed macroeconomic signals for cryptocurrencies. Positive indicators, like strong job growth and falling inflation, typically favor risk assets like Bitcoin. Yet, rising oil prices and geopolitical tensions in the Middle East are raising new inflation concerns, adding uncertainty to the market. These dynamics explain why Bitcoin has stalled around the $63,000 mark as investors shift toward multi-asset products.

“Since June, multi-asset products have been a favorite among investors who prefer to invest in a diversified basket of assets rather than individual ones,” the CoinShares report noted.

Currently, Bitcoin is trading at $62,988, reflecting a modest gain of 1.38% since the start of Monday’s session.