Breaking Down Last Week’s Crypto Fund Outflows
Throughout last week, the crypto investment sector experienced a substantial withdrawal of capital from global crypto funds. Recently released data from CoinShares revealed a net outflow of nearly $1 billion from these funds, breaking a seven-week streak of inflows that accumulated $12.3 billion.
Significant Outflow Figures
These outflows totaled approximately $942 million, a remarkable figure that nearly doubled the previous record of $500 million observed at the end of January. Various prominent players in the asset management industry, including BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares, were all affected by this wave of withdrawals, according to CoinShares.
The timing of these outflows coincided with a notable correction in the values of underlying cryptocurrencies, resulting in a $10 billion decrease in the funds’ assets under management. Nonetheless, the combined AUM remains at $88 billion, surpassing previous highs.
These outflows have significantly impacted trading volumes and asset valuations within the sector of crypto investment products. Trading volume plummeted by a third to $28 billion last week due to substantial price corrections that diminished the funds’ AUM.
The US market, particularly new spot Bitcoin ETFs, experienced over $1 billion in inflows, which were insufficient to offset the nearly $2 billion outflows stemming from the conversion of Grayscale’s GBTC fund.
According to CoinShares Head of Research James Butterfill, the recent price correction led to investor hesitancy, resulting in significantly lower inflows into new ETF issuers in the US. These inflows partially offset the substantial outflows from Grayscale, amounting to $2 billion. Butterfill stated, “The recent price correction resulted in hesitancy from investors, leading to much lower inflows into new ETF issuers in the US, which saw US$1.1bn inflows, partially offsetting incumbent Grayscale’s significant US$2bn outflows last week.”
Global Crypto Sentiment and Market Responses
The sentiment in the global crypto investment market last week was not solely focused on US-based funds or Bitcoin. Investment products in Sweden, Hong Kong, Switzerland, and Germany faced outflows, while funds in Brazil and Canada saw inflows, indicating a mixed global investor sentiment.
Furthermore, products based on Ethereum, Solana, and Cardano experienced outflows, illustrating the extensive repercussions of the market downturn. Conversely, altcoin funds like Polkadot, Avalanche, and Litecoin saw net inflows, indicating specific investor interest in the altcoin sector.
This period of market recalibration has sparked discussions among industry leaders regarding the role and accessibility of Bitcoin ETFs in promoting broader market integration.
Industry experts such as Bivu Das of Kraken UK and Daniel Seifert of Coinbase UK have advocated for the UK market’s access to Bitcoin ETFs, emphasizing the significance of these investment products in establishing a comprehensive crypto ecosystem. By providing indirect exposure to Bitcoin’s price movements, these instruments offer a regulated and potentially more accessible avenue for investors, contributing to the diversification and maturation of the digital currency market.
ICYMI: Kraken UK Managing Director Bivu Das says he’d “absolutely” like to see a #Bitcoin ETF in the UK, providing regulated access to crypto exposure currently lacking and boost UK’s crypto hub ambitions, and legitimize bitcoin for institutions.
— AP Crypto (@AP_Crypto_) March 23, 2024
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