In an unexpected twist of events, cryptocurrency investment products experienced a record week of outflows after a promising seven weeks of steady inflows, a period where several records had been shattered. The latest data confirms an unprecedented surge in outflows from these investment platforms, illustrating a dramatic shift in investor sentiment, and leading to the creation of yet another record in this volatile investment landscape.
CoinShares, an authority in digital asset data, reported that investors withdrew a staggering $942 million from crypto investment platforms last week, which amounted to a $10 billion reduction in total assets under management (AuM). An intriguing aspect of this trend was that a significant chunk of the outflow was credited to Bitcoin, particularly from Spot Bitcoin Exchange-Traded Funds (ETFs) in the US, which experienced daily outflows.
The recent weekly report by CoinShares highlighted the influx of money into crypto platforms observed over the past two months. These investment products witnessed a steady seven-week inflow adding up to a remarkable $12.3 billion. The lion’s share of this influx went to Bitcoin, propelling the price of the largest cryptocurrency to never-before-seen heights.
However, last week’s scenario painted a different portrait for Bitcoin investment platforms. Spot Bitcoin ETFs in the US reported a modest inflow of $1.1 billion, which failed to counterbalance the substantial outflows of $2 billion from the Grayscale platform. Consequently, Bitcoin recorded overall outflows of approximately $904 million over the week. Even short Bitcoin products were not spared, with minor outflows of $3.7 million reported.
This wave of pessimism also hit other investment platforms, leading to outflows in Ethereum, Solana, Cardano, and multi-asset products, with losses of $34.2 million, $5.6 million, $3.7 million, and $7.3 million respectively. Conversely, Litecoin, XRP, and Polkadot experienced increased inflows, reporting $2 million, $1.2 million, and $5 million respectively. Across all platforms, total trading volume tumbled to $28 billion, marking a two-thirds decrease from the previous week.
Geographically, the US held the dubious honor of the highest outflows of $860 million, with Sweden and Switzerland trailing with $36.9 million and $25.2 million respectively. CoinShares attributed this reversal of investor sentiment primarily to growing uncertainty among investors.
Fascinatingly, the diminished interest in Spot Bitcoin ETFs coincided with a sharp downturn in Bitcoin’s price, plummeting to a low of $61,370, an indicator of the significant sway these funds hold over Bitcoin’s valuation. The recent events suggest investors are pumping the brakes on their formerly enthusiastic investment in Spot Bitcoin ETFs, though it’s unclear if this is a temporary hiatus or the beginning of a more prolonged cooldown.
Despite the current trend, the notoriously fickle nature of the cryptocurrency market means investor sentiment is likely to swing back to bullish sooner rather than later. Confirming this view, BitMEX Research data shows that Spot Bitcoin ETFs experienced net inflows yesterday, albeit a meager $15.7 million, the lowest inflow day since January 26.
As it stands, the bulls have regained control, propelling Bitcoin’s price by 5.38% over the past 24 hours. At the time of reporting, Bitcoin is trading at $70,676, hinting that a return to the $73,000 mark may be imminent.