Last week, the cryptocurrency investment market witnessed a notable $88 million outflow, contributing to a larger eight-week outflow of $417 million. However, amidst this trend, investment products offering exposure to Litecoin (LTC) and XRP showed substantial inflows, capturing the attention of market observers. CoinShares’ Digital Asset Fund Flows Weekly report suggests that this pattern resembles a record-breaking 12-week withdrawal phase observed from April to June of the previous year. The report also highlights the potential link between these outflows and prevailing monetary policies as investors exercise caution due to the uncertain future of interest rates.
Outflows from a Single Provider:
Remarkably, a staggering 87% of the total outflows originated from a single cryptocurrency investment products provider known as 3iQ. Their outflows amounted to $76.9 million in the past week alone and reached approximately $286 million since the beginning of this year. This significant withdrawal trend demonstrates the impact of investor sentiment on the overall market.
Bitcoin, the dominant player in the digital currency sphere, faced its share of challenges, with outflows totaling $52 million. These setbacks contributed to an eight-week aggregate outflow of $254 million, constituting 1.2% of the total assets under management (AUM). Additionally, short positions on Bitcoin experienced a seven-week outflow of $1.1 million, representing a considerable 44% of the AUM.
Ethereum’s Mixed Performance:
The second-largest cryptocurrency, Ethereum, also encountered difficulties, witnessing its most substantial single-week outflow since the “Merge” event in September of the previous year, amounting to $36 million. However, Ethereum’s overall performance appears less dire than Bitcoin’s, as the total outflows only account for a mere 0.6% of the AUM.
Altcoins Defy the Outflow Trend:
In contrast to Bitcoin and Ethereum, altcoins have generally defied the outflow trend this year. Litecoin experienced $700,000 in inflows during the past week, bringing the year-to-date inflows to $2 million. Similarly, XRP saw $500,000 in inflows, reaching a year-to-date total of $4 million. Notably, XRP investment products have consistently shown inflows during a period when outflows in the cryptocurrency market remained steady.
Inflows Amidst XRP’s Positive Factors:
The surge in inflows coincides with XRP’s recent market capitalization growth driven by several factors. Notably, XRP witnessed its second and third-largest address activity spikes within just two days. Furthermore, Ripple’s legal battle with the SEC is expected to conclude in the near future, creating an optimistic outlook for cryptocurrency.
Despite the recent outflows in the cryptocurrency investment market, Litecoin and XRP investment products attracted significant inflows. Bitcoin faced challenges with substantial outflows, while Ethereum experienced a mixed performance. Altcoins, on the other hand, showed resilience against the outflow trend. XRP’s inflows coincide with positive factors driving its market capitalization growth. As the market evolves, investors remain cautious due to prevailing monetary policies and the uncertain trajectory of interest rates.