Record Outflow of Digital Asset Investment Products Signals Market Shift
Digital asset investment products have experienced a significant shift in market sentiment, with a record outflow of $942 million from March 16 to 22. This marks the end of a seven-week streak of substantial inflows totaling $12.3 billion. The primary driver behind this negative shift was the outflows from Grayscaleโs GBTC (Grayscale Bitcoin Trust), which amounted to $2 billion, surpassing the net inflows into its competitors by $1.1 billion. Consequently, the market witnessed a significant withdrawal of $904 million from Bitcoin (BTC)-related investment instruments, a stark contrast to the highest-ever influx of $2.86 billion the previous week.
Total Volume of Crypto AUM Decrease by $10 Billion
As a result of the outflows and the price retracement, the total volume of digital assets under management decreased by $10 billion, settling at $88.2 billion. Just a week prior, this metric had surpassed the $100 billion mark. Additionally, clients withdrew $3.7 million from structures enabling short positions on BTC, following the previous weekโs peak investment of $26 million since the beginning of the year.
Outflows Impact Ethereum and Other Altcoins
The outflows were not limited to Bitcoin-related investment products but also affected other cryptocurrencies. In Ethereum (ETH) funds, outflows increased from $13.9 million to $34.2 million. Similarly, investors withdrew $5.6 million and $3.7 million from instruments based on Solana (SOL) and Cardano (ADA), respectively. However, products tied to Polkadot (DOT), Avalanche (AVA), and Litecoin (LTC) experienced inflows of $5 million, $2.9 million, and $2 million, respectively.
Bitcoin ETFs See Four Consecutive Days of Outflows
Last Thursday, the Grayscale Bitcoin Trustโs (GBTC) ETF experienced another day of significant outflows, with nearly $359 million exiting the fund. This followed a week of substantial outflows, with March 18 witnessing the largest single-day outflow of $642 million. The figures brought the total outflows for GBTC last week to $1.8 billion, marking the fourth consecutive day of net outflows across all 10 Bitcoin ETFs.
Bernstein Raises Year-End Forecast for Bitcoin
Despite the recent slide in Bitcoin prices, investment firm Bernstein remains optimistic about the cryptocurrencyโs future. In a research note, Bernstein revised its price target for bitcoin to $90,000, up from the previous projection of $80,000. The firm also expressed optimism about cryptocurrency mining stocks, citing Bitcoinโs rise to around $74,000 and the positive response to new spot BTC ETFs.
Hot Take: Market Shift Sparks Concerns Amidst Ongoing Volatility
The recent record outflow of digital asset investment products signals a shift in market sentiment and raises concerns amidst ongoing volatility in the crypto space. With a seven-week streak of substantial inflows coming to an end and a significant withdrawal from Bitcoin-related investment instruments, investors are showing hesitancy in light of price retracement.
This market shift has also impacted altcoins like Ethereum, Solana, and Cardano, which experienced outflows from their respective investment products. However, some cryptocurrencies like Polkadot, Avalanche, and Litecoin managed to attract inflows during this period.
It remains to be seen how these outflows will affect the overall market performance and whether the recent price correction will dampen investor enthusiasm in the short term. However, investment firm Bernsteinโs revised year-end forecast for Bitcoin suggests continued optimism in the long run.
Sources:
CoinShares,
Crypto News,
Crypto News,
Investors.com
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