The cryptocurrency market has faced a sharp decline in capital inflows, reflecting investor caution amid increased volatility.
Decline in Capital Inflows to the Crypto Market
Capital inflows into the cryptocurrency market have seen a sharp decrease, falling from $8.2 billion on April 4th to a mere $2.38 billion by April 18th. This significant drop demonstrates a growing caution among investors due to increasing market volatility and macroeconomic pressures.
Fear Gripping the Crypto Market
Sentiment data supports this shift in behavior. The Fear and Greed Index, a measure of market sentiment, has remained steady at 33, indicating a state of fear. This level has been consistent for weeks, suggesting a psychological impasse with buyers hesitant to make aggressive moves.
Economic Instability and Crypto Confidence
Adding to the pressure, macroeconomic concerns have intensified. Recent data shows that 1-year inflation expectations surged 1.7 percentage points in April, reaching 6.7%, the highest level since 1981. However, there are positive signals: Bitcoin (BTC) ETFs recorded a $107 million net inflow on April 17.
Despite the significant drop in capital inflows and persistent market fear, steady institutional inflows through ETFs suggest that investors are not completely abandoning the crypto market. This appears to be a short-term reset driven by macro fears.
