As a seasoned crypto investor with a decade of experience under my belt, I’ve seen my fair share of market fluctuations. The recent $305 million outflows from crypto ETPs are a stark reminder that even the most promising digital assets can be vulnerable to macroeconomic factors.
Last week, there were substantial withdrawals from investment products tied to cryptocurrencies, as per a recent report. This mass withdrawal was spearheaded by the leading cryptocurrency by market value, with more than $300 million being pulled out on August 31st. This large-scale withdrawal indicates a growing pessimism among investors across different geographic areas.
The US Leads Crypto ETPs $305M Outflows
A recent report from European digital asset manager CoinShares indicates that crypto investment products experienced an outflow of approximately $305 million over the past week. The data from various sources and regions suggests that this withdrawal could be due to a widespread negative feeling towards cryptocurrencies, potentially influenced by stronger economic data in the United States.
It seems that the negative reactions I’ve noticed are primarily due to the unexpectedly robust economic statistics emerging from the U.S., which have led market participants to reconsider the likelihood of a 50-basis point reduction in interest rates this month.
During the period from August 26th to August 31st, the United States had a regional outflow of approximately $318 million. Moreover, the U.S. has experienced the largest outflows so far this month, totaling around $65 million in negative flows.
Last week, Germany and Sweden experienced outflows amounting to approximately $7.3 million and $4.3 million, respectively. In terms of monthly total (MTD) negative flows, they ranked second and third with $13.4 million and $1.3 million in outflows for the current month.
Despite having the highest outflows YTD, Canada surprisingly saw positive net flows of $13.2 million due to inflows. The digital asset manager anticipates that the crypto market will remain responsive to changes in interest rate expectations.
As the Federal Reserve moves nearer to a potential shift in policy, we anticipate that the asset class will grow more responsive to interest rate forecasts.
Negative Sentiment Focuses On Bitcoin
According to the recent report, it was Bitcoin, the primary cryptocurrency, that saw the highest level of pessimism with a total of $319 million being withdrawn. Ethereum followed closely behind with outflows amounting to $5.7 million. The majority of these losses were observed in Bitcoin ETFs (exchange-traded funds), as they accounted for the largest portion of investment product losses.
Among all exchange-traded products (ETPs), ARK 21Shared Bitcoin ETF (ARKB) experienced the most significant withdrawal, totaling approximately $220.95 million. In comparison, Grayscale Bitcoin Trust (GBTC) and ProShares Bitcoin Strategy ETF (BITO) had outflows of around $119.19 million and $78.28 million respectively.
Despite other investments, the iShares Bitcoin Trust ETF (IBIT) led with an impressive $210.55 million increase in funds. Meanwhile, short-term Bitcoin investment products saw a second consecutive week of inflows totaling $4.4 million – the largest since March 2024.
Last week, trading activity on Ethereum remained relatively steady. According to recent findings, the volume of ETH-related products is similar to what it was before the debut of spot ETH ETFs. Interestingly, these volumes accounted for just 15% of the trading activity seen during the US ETFs launch week.
Based on information from Farside Investors, Ethereum Exchange Traded Funds (ETFs) showed no trading activity whatsoever on Friday. This lack of movement in ETH investment products, with no inflows or outflows occurring among all issuers on August 30, is a phenomenon not seen since the debut of US spot crypto-backed ETFs back in January.
It’s significant to mention that Ethereum ETFs experienced very little trading during the week, with most providers having no transactions and Grayscale Ethereum Trust even showing a decrease. However, Solana-related investment products attracted approximately $7.6 million last week.
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2024-09-03 04:42