Fitch Ratings sees a threat in central bank cryptocurrencies, and in a week, $98 million was withdrawn from BTC funds
$98 million was withdrawn from bitcoin funds in 7 days
CoinShares analysts have recorded an outflow of assets from funds based on digital currencies. Over the past 7 days, investors have withdrawn about $50 million from such funds.
This is the first net cash outflow since early 2021, according to CoinShares data. A record $98 million has left bitcoin funds. However, products based on other cryptocurrencies are still attracting investors.
This year, crypto funds raised $5.6 billion. However, the current situation indicates how quickly the market sentiment is changing amid the fall in the rate of the main crypto coin.
According to the Coinmarketcap website, the price of BTC has dropped by almost 20% over the past week. The cost of bitcoin on May 18 is $45,336.
Fitch Ratings is concerned about the risks of regulators issuing their own digital currencies
The digital currencies that central banks are planning to issue could wreak havoc on the global financial system. This will lead to the elimination of the need for banking and credit organizations, analysts at Fitch Ratings say.
The rating agency believes that the large-scale introduction of state digital currencies will lead to the fact that individuals and companies will transfer money to the regulators’ cryptocurrencies. In this case, the services of commercial banks will cease to be in demand.
However, Fitch Ratings also voiced the main advantages of cryptocurrencies from central banks. For example, the introduction of such assets will speed up non-cash payments, which will be cheaper. In addition, more interested persons will be able to use banking services.
Asset managers criticize bitcoin
T Rowe Price President Rob Sharps believes digital currencies are having a major impact on capital markets. However, he does not advise his clients to invest in BTC due to its “extreme volatility”.
Glenmede’s Chief Investment Officer Jason Pride believes that “you need to stay away from the main cryptocurrency.” In his opinion, “the Fed and other regulators are hardly fans of the current structure of the cryptocurrency market.” For example, the SEC recently announced the risks associated with buying bitcoin futures.
“The volatility of crypto is stratospherically high and we often see that, when equities sell off, so does bitcoin and that means it is not a good portfolio diversifier,” Pride said.
