Crypto Investment Products See Sixth Consecutive Week of Outflows

Crypto investment products have witnessed a sustained outflow trend for the sixth consecutive week, with some altcoins showing resilience amid this broader market sentiment. Let’s delve into this crypto outflow trend’s details and implications.

According to CoinShares’ latest digital asset fund flow weekly report, crypto funds experienced a net outflow of $9 million in the past week, bringing the total to approximately $464 million over the last ten weeks. Prominent digital asset management players like CoinShares, Grayscale, 21Shares, Bitwise, and ProShares have all felt the impact of this ongoing trend.

While the outflows have decreased from the previous week’s $54 million, they continue a ten-week streak of net capital moving away from these products. However, this trend is not uniform across regions. Europe has resisted this wave, recording inflows of $16 million. James Butterfill, Research Head at CoinShares, attributes this regional divergence to varying reactions to the regulatory environment. European investors view recent regulatory developments as an opportunity, while US investors withdrew $14 million, possibly due to regulatory concerns.

Trading volumes in crypto funds also reflect caution, dropping from over $1 billion in the previous week to $820 million, well below the yearly average of $1.3 billion.

Even Bitcoin, the leading cryptocurrency, has not been immune to this trend, registering outflows for three consecutive weeks, with a $6 million dip in the past week alone. Interestingly, Short-Bitcoin products, which profit when Bitcoin prices fall, have also seen outflows of $2.8 million, indicating a potential reduction in bearish bets on Bitcoin. According to Butterfill, this represents a 78% reduction in assets under management over the past 22 weeks.

Ethereum, another heavyweight in the crypto space, has also experienced outflows for six consecutive weeks, resulting in a recent reduction of $2.2 million.

In contrast, XRP and Solana have emerged as bright spots in the market, with both tokens recording inflows of $660,000 and $310,000 in the past week. Despite the negativity, this suggests some investors’ selective and value-driven approach in the altcoin market. Last week, these two assets also witnessed significant inflows, further emphasizing their resilience in market downturns.

However, it’s important to note that despite their positive capital movements, both XRP and Solana continue to feel the impact of the global crypto market downturn, with XRP down 1.5% in the past day and Solana showing a modest 0.5% increase over the same period. The crypto market remains highly volatile, and investors are navigating these fluctuations with varying strategies, as reflected in the contrasting trends seen across different digital assets.