Crypto investment products offered by asset managers like CoinShares, Grayscale, 21Shares, Bitwise, and ProShares experienced a sixth consecutive week of outflows. Last week, these crypto funds saw a further decline, with a total of $9 million being withdrawn from them.
While the outflows from crypto investment products did decrease significantly from the previous week’s figure of $54 million, they have contributed to a ten-week streak of cumulative outflows that now amounts to $464 million. The consistent trend of outflows reflects a sense of caution prevailing among investors, and it also highlights regional disparities in response to the regulatory environment, as pointed out by James Butterfill, the Research Head at CoinShares.
Europe’s crypto investment products inflows surpassed US
In the latest report from the European digital asset manager, Butterfill noted that a divergence in sentiment from a regional perspective was evident this week, with crypto investment products inflows into Europe totalling $16 million owing to investors viewing recent regulatory disappointment as an opportunity. While US investors pulled out $14 million, seemingly in a continued funk over recent events, Butterfill added.
During the week, trading volume in crypto investment products dropped to $820 million, a decrease from the previous week’s figure of over $1 billion. That is notably below the yearly average of $1.3 billion, reflecting a similar trend seen in the broader cryptocurrency market.
Bitcoin investment products experienced outflows for the third consecutive week, totalling $6 million. Short-Bitcoin products also saw outflows amounting to $2.8 million, suggesting that investors are persistently closing their short positions. Butterfill noted that Short-Bitcoin outflows now represent a 78% reduction in assets under management over the last 22 weeks. Meanwhile, Ethereum saw outflows for the sixth consecutive week, amounting to $2.2 million.
In contrast, XRP and Solana deviated from the trend, experiencing inflows of $0.66 million and $0.31 million, respectively, indicating a more selective approach by investors in the altcoin space, who may be seeking value.
Crypto market developments have not led to a rally
Comparingly, despite recent victories against the US Securities and Exchange Commission and new Bitcoin ETF filings, investors withdrew nearly half a billion dollars from cryptocurrency products over the past nine weeks, according to last week’s report. The crypto investment products experienced outflows totalling $54 million, marking the fifth consecutive week of selloffs, according to the CoinShares report. Of this, Bitcoin accounted for 85% of the outflows, amounting to $45 million.
Matt Maley, Chief Market Strategist at Miller Tabak + Co., noted that many investors are concerned that despite positive developments in the crypto market in recent months, it has not led to a significant rally in Bitcoin and other cryptocurrencies.
Over the weekend, Bitcoin (BTC) demonstrated a relatively stable price movement, but volatility surged towards the end. Within a six-hour window, BTC experienced a 2.61% drop, leading to substantial liquidations. However, based on this recent development, the liquidation of long positions might prompt a minor upward movement in the near term. That suggests that the market could witness some short-term price fluctuations.
Maley also emphasized that institutional investors are currently shifting their focus away from cryptocurrencies when seeking asset classes that can potentially deliver strong performance in the remaining months of the year. That, according to Maley, indicates a shift in investor sentiment and preferences towards other types of assets.
Meanwhile, CoinShares recently expanded its offerings by launching a new hedge fund division, extending its services to US investors. Traditional asset management expert Lewis Fellas will lead the initiative. The recently established division, named CoinShares Hedge Fund Solutions, represents the company’s strategic move to meet the rising demand for cryptocurrency-based products, particularly those centered around Bitcoin.
Fellas highlighted the dynamic nature of the cryptocurrency space, acknowledging that it is filled with promises and momentary successes on the road to widespread adoption. He further emphasized that the needs and preferences of institutional cryptocurrency investors are continuously evolving in tandem with the shifting risk landscape. Notably, the newly launched hedge fund division offers a range of crypto investment products with the aim of bridging the gap between traditional investors and the digital asset industry.
