Record Outflows of Crypto Funds Reported Amid Price Correction
Crypto funds at asset managers such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares witnessed record outflows of $942 million globally last week, according to the latest report from CoinShares. This figure nearly doubled the previous record of $500 million set in January. The outflows followed a seven-week inflow streak totaling $12.3 billion, including the record inflows of $2.9 billion seen during the previous week. The price correction in cryptocurrencies resulted in a drop in trading volume for crypto investment products by a third to $28 billion for the week. Additionally, the funds’ assets under management (AUM) decreased by $10 billion.
Newborn Spot Bitcoin ETFs Fail to Offset Grayscale Outflows
Despite over $1 billion worth of inflows into newborn spot Bitcoin exchange-traded funds (ETFs) in the US, they were not enough to counteract the nearly $2 billion outflows from Grayscale’s converted GBTC fund. CoinShares’ Head of Research James Butterfill attributed this to investor hesitancy caused by the recent price correction. While new ETF issuers in the US saw inflows of $1.1 billion, it only partially offset Grayscale’s significant outflows.
Key Takeaways:
- Crypto funds experienced record outflows of $942 million globally last week.
- This nearly doubled the previous record set in January.
- Trading volume for crypto investment products dropped by a third.
- The price correction resulted in a decrease of $10 billion in AUM.
- Newborn spot Bitcoin ETFs did not offset Grayscale’s outflows.
Poor Sentiment Affects Crypto Investment Products Globally
The poor sentiment observed last week was not limited to US-based funds or Bitcoin. Crypto investment products based in Sweden, Hong Kong, Switzerland, and Germany also experienced outflows of $37 million, $35 million, $25 million, and $4 million respectively. However, funds based in Brazil and Canada bucked the trend with inflows totaling $9 million and $8.4 million.
Among the altcoin-based investment products, Ethereum, Solana, and Cardano suffered outflows of $34 million, $5.6 million, and $3.7 million respectively. On the other hand, the rest of the altcoin-related funds saw net inflows of $16 million. This includes Polkadot ($5 million), Avalanche ($2.9 million), and Litecoin ($2 million).
Crypto Market Declines Across the Board
Last week witnessed a decline across the broader crypto market as well. The GM30 index, which represents the top 30 cryptocurrencies by market cap, fell by 10% from 149.65 to a low of 135.35. It has since recovered slightly and is currently trading at 150.77.
Key Takeaways:
- Crypto investment products globally saw poor sentiment last week.
- Outflows were observed in various countries including Sweden, Hong Kong, Switzerland, and Germany.
- Brazil and Canada-based funds experienced inflows amidst the overall outflow trend.
- Ethereum, Solana, and Cardano-based investment products suffered outflows.
- Other altcoin-related funds saw net inflows.
- The broader crypto market experienced a decline in the GM30 index.
Hot Take: Overall Market Correction Impacts Crypto Funds
The recent outflows from crypto funds can be attributed to the overall market correction and the decrease in trading volume. The decline in asset values resulted in a decrease in AUM for these funds. Additionally, investor hesitancy caused by the price correction affected the inflows into new ETF issuers. However, it is worth noting that despite the outflows, the combined AUM of crypto funds remains above prior cycle highs at $88 billion.
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