Digital asset investment products saw withdrawals totaling $528 million for the first time in four weeks, according to James Butterfill, Head of Research at CoinShares.
This is likely a response to worries about a US recession, geopolitical unrest, and the ensuing wider market liquidations across most asset classes.
Significant exits from crypto-based investment products like Bitcoin and Ethereum demonstrate how investors respond to market uncertainty. The primary causes of these fluctuations are perceived to be economic and geopolitical concerns in the US.
Digital asset investments see $528M outflow, ending 4-week inflow streakCoinShares' latest weekly fund flow report reveals that digital asset investment products experienced a net outflow of approximately $528 million last week, breaking a four-week run of net inflows. Bitcoin… pic.twitter.com/5fN6dbATV3
— CoinNess Global (@CoinnessGL) August 5, 2024
Sales of Ethereum and Bitcoin Surges!
Upon examining cryptocurrency funds separately, it was seen that most fund inflows were directed towards Bitcoin. The largest altcoin, Ethereum (ETH), had an outflow of $146.3 million, while BTC saw an influx of $400 million. A further 1.8 million dollars came into the Bitcoin Short fund, which was linked to the drop in BTC.
Litecoin (LTC) witnessed minor inflows of $0.2 million, XRP saw modest inflows of $0.4 million, and Solana (SOL) experienced an outflow of $2.8 million.
With a $531 million worldwide loss, U.S.-based funds saw the most significant net outflows in the region. Crypto investment products with bases in Germany and Hong Kong also had net outflows of $12 million and $27 million, respectively. However, according to Buterfill, the price decline was viewed as a chance to expand into digital asset products in Switzerland and Canada, where net inflows of $28 million and $17 million were recorded.
Last week, $18 million was removed from crypto-related stocks, continuing the trend of withdrawals from large tech-related ETFs, according to Butterfill.
Losses in the crypto market get worse.
According to data from SoSo Value, which breaks down the ETF landscape, Grayscale’s Bitcoin Trust GBTC resumed its outflows, losing $245 million from July 29 to August 2. This brought its historical net outflow to an astounding $19.06 billion.
On the other hand, BlackRock’s iShares Bitcoin Trust (IBIT) saw a weekly net influx of $370 million, bringing its total historical net inflow to $20.1 billion.
Regarding Ethereum, data indicates that spot ETFs had a net withdrawal of $169 million last week. The Ethereum Trust ETHE, owned by Grayscale, saw noteworthy withdrawals of $603 million, increasing its net outflow history to $2.12 billion.
Market volatility has significantly impacted the total assets under management (AuM) in cryptocurrency exchange-traded funds (ETPs), with $10 billion lost since Friday’s closure. Last week, $14.8 billion worth of ETP trades were made, accounting for less than 25% of the market.
The ongoing regulatory uncertainty across several countries must be considered when delving deeper into the geopolitical issues impacting this atmosphere. With its strict regulatory norms, the U.S. continues to influence the mood of the world market significantly.
Investors’ anxiety has recently increased due to the SEC’s increased scrutiny of some financial products tied to cryptocurrencies. This regulatory pressure may inhibit innovation and reduce investor excitement.
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