Strong Dollar and Regulatory Concerns Impact Institutional Sentiment: CoinShares
CoinShares, a digital assets manager, reports that institutional investors have become less optimistic about cryptocurrency due to a strong US dollar and ongoing regulatory concerns in the United States. According to CoinShares’ latest Digital Asset Fund Flows Weekly Report, digital assets experienced outflows of nearly $60 million last week, marking the fourth consecutive week of outflows. This brings the total outflows to $294 million, representing 0.9% of total assets under management (AuM). CoinShares attributes the outflows to worries over regulatory measures and the recent strength of the US dollar. The report also notes a significant decline in trading volumes, dropping by 73% compared to the previous week.
Bitcoin Takes the Brunt, Short-BTC Products Experience Inflows
Bitcoin (BTC) accounted for the majority of the outflows, totaling $69 million. CoinShares also observed a substantial influx into short-BTC products, indicating negative sentiment towards the asset class. Ethereum (ETH), Solana (SOL), and multi-asset investment vehicles experienced outflows of $4.8 million, $1.1 million, and $0.8 million, respectively. On the other hand, XRP products received $0.4 million in inflows. CoinShares highlights that short-bitcoin products saw their largest weekly inflows since March 2023, which coincided with a period of heightened regulatory uncertainty.
Hot Take
Institutional investors are displaying a lack of confidence in the cryptocurrency market due to a strong US dollar and regulatory uncertainties. CoinShares’ report reveals a consistent trend of outflows in digital assets and a significant decrease in trading volumes. Bitcoin has been particularly affected, with large outflows recorded. The inflow of funds into short-BTC products suggests a negative sentiment towards the asset class. Ethereum, Solana, and multi-asset investment vehicles also experienced outflows, while XRP products saw inflows. These developments reflect the ongoing concerns surrounding regulation and the impact of the US dollar’s strength on the crypto market.
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