Digital Asset Investment Products Experience $500 Million Outflows
Over the past week, digital asset investment products have seen significant outflows of $500 million as the wider market struggled and experienced sell-offs.
This follows the approval of a spot Bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC), which led to large exits from Bitcoin (BTC) and various altcoins, with the United States seeing the highest outflows.
US$500m outflows last week, US$2.2bn of that being Grayscale. Outflows look to be slowing though. While new US ETF issuers saw US$1.5bn inflows.
— James Butterfill (@jbutterfill) January 29, 2024
Grayscale has witnessed $5 billion in outflows since the SEC’s decision on January 11, prompting further exits from other regions and causing prices across the crypto market to decline.
Last week alone, Grayscale experienced outflows of $2.2 billion, while newly approved spot ETFs saw inflows of $1.8 billion, bringing the total since January 11 to $5.94 billion.
CoinShares analysts suggest that as daily volumes decrease following a positive uptick in the market, the outflows may begin to subside.
Price Correction After Spot Bitcoin ETF Rollout
The correction in prices immediately after the launch of spot Bitcoin ETFs can be attributed to the acquisition of seed capital for Bitcoin before January 11, as there was heightened anticipation of the approval.
Before the approval, institutional investors showed renewed interest in Bitcoin, leading to increased inflows to cryptocurrency funds in the third and fourth quarter of 2023.
Bitcoin and Ethereum See Outflows
Bitcoin products experienced outflows of $479 million, making it the cryptocurrency with the largest outflows. Short Bitcoin, on the other hand, saw inflows of $10.6 million during a week dominated by bearish activity.
Currently, Bitcoin is trading at $42,059 and has gained 4% in the past seven days. Analysts at Matrixport projected a price increase to $50,000 following potential approval, based on December’s inflows.
Ethereum recorded outflows of $38.8 million, bringing its monthly inflows to $3.1 million and its Assets Under Management (AUM) to $9.6 billion. Other cryptocurrencies like Polkadot (DOT) and Chainlink (LINK) experienced outflows of $0.7 million and $0.6 million respectively.
Geographical Breakdown of Outflows
The United States saw the majority of the outflows, totaling $408.8 million, followed by Switzerland with outflows of $59.8 million and Germany with outflows of $31.7 million. The United States still maintains control over $37.6 billion in AUM, while Canada and Switzerland hold more than $3 billion each.
Hot Take: Digital Asset Funds Record $500 Million Outflows Amid Market Decline
During the past week, digital asset investment products experienced significant outflows of $500 million as the wider market faced sell-offs and struggled. This comes after the approval of a spot Bitcoin ETF by the SEC, resulting in large exits from Bitcoin and altcoins. Grayscale alone has seen $5 billion in outflows since January 11. While last week’s outflows reached $2.2 billion, newly approved spot ETFs saw inflows of $1.8 billion. The market correction after the ETF rollout can be attributed to the anticipation of approval. Bitcoin and Ethereum witnessed outflows, with Bitcoin products leading the pack with $479 million in outflows. The United States accounted for the majority of the outflows, followed by Switzerland and Germany.
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