Crypto Outflows Continue Amid Market Downturn

The

cryptocurrency

market continued its trend of increasing uncertainty, with investment products related to digital assets, including Bitcoin and Ethereum, experiencing a sixth consecutive week of net outflows. Last week, Bitcoin-related investments saw a net outflow of $5.9 million, while Ethereum-linked investments recorded an outflow of $2.2 million. Bitcoin short-selling investment instruments also registered a net outflow of $2.8 million.

The total trading volume for these digital asset investment products was significantly low last week, amounting to only $820 million. This marked a notable decline from the average yearly trading volume of $1.3 billion, mirroring the broader slowdown in digital asset market activity.

Bitcoin, the leading cryptocurrency, has been experiencing minor outflows for three consecutive weeks, totaling $6 million. Additionally, short-Bitcoin products have seen outflows of $2.8 million. This suggests that investors are slowly reversing their short positions following a brief inflow of $15 million earlier in the month.

Ethereum has not been spared from the trend either, with six straight weeks of outflows amounting to $2.2 million. However, there seems to be growing interest in specific alternative cryptocurrencies (altcoins), as demonstrated by the inflows into XRP and Solana which amounted to $0.66 million and $0.31 million respectively. Crypto sentiment goes in different directions in Europe and America.

Digital asset investment products saw minor outflows for the 6th consecutive week, totaling $9 million last week according to the latest fund flow data from CoinShares.

Volumes remained down at $820 million for the week, well below the $1.3 billion average so far this year and matching the low volume trend across the broader digital asset markets.

Sentiment split on a regional basis, with European products seeing inflows of $16 million as investors viewed recent regulatory disappointments in the US as a buying opportunity. In contrast, US-listed products saw outflows of $14 million as American investors remained cautious.

“In Europe, the sentiment is much more constructive, investors now have the well-defined MiCa directive and recent flows data suggests they see the weak sentiment in the US as a buying opportunity,” James Butterfill, Head Of Research at CoinShares

The EU introduced the Markets in Crypto-Assets (MiCA) regulation in April of this year, to protect investors and consumers while promoting a framework for crypto assets and crypto-related services.

Bitcoin saw small outflows for the 3rd straight week, totaling $6 million. Short-bitcoin products also saw outflows of $2.8 million, suggesting investors are capitulating to bearish bets after a brief spike in short interest last month.

Ethereum continued to suffer its 6th consecutive week of outflows totaling $2.2 million as enthusiasm faded for the second-largest cryptocurrency.

Multi-asset funds also saw a steady stream of outflows, now totaling $32 million year-to-date. Investor interest appears to be shifting to more selective plays in the altcoin space, with inflows into XRP and Solana totaling $660,000 and $310,000 respectively.