- Digital asset funds recorded $812 million in outflows last week, the largest weekly drop in months.
- Bitcoin and Ethereum both faced pressure, while Solana and XRP drew strong inflows.
- Ethereum reserves on spot exchanges continue to decline, setting the stage for future demand-driven rallies.
Digital asset investment products saw significant outflows last week, led by weakness in Bitcoin and Ethereum. Data from CoinShares revealed that funds recorded $812 million in withdrawals, reversing some of the momentum built earlier this month.
The decline followed stronger-than-expected U.S. economic data, including revised GDP and durable goods orders, which lowered expectations for multiple rate cuts this year.
Despite the setback, overall market flows remain strong. Month-to-date inflows stand at $4 billion, and year-to-date totals have reached $39.6 billion. This keeps the sector on track to potentially match last year’s record of $48.6 billion.
Regionally, the United States bore the brunt of the decline, recording $1 billion in outflows, while Switzerland, Canada, and Germany all attracted inflows, showing resilience outside U.S. markets.
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Bitcoin and Ethereum Face Pressure
Bitcoin took the biggest hit, losing $719 million from investment products over the week. Analysts observed that the withdrawals did not come with short-term Bitcoin demand growth, a factor that implies the sell pressure could be short-term as opposed to the effect being based on the larger-picture bearish sentiment.
Ethereum also suffered, posting $409 million in outflows. This nearly brought its year-to-date inflows of $12 billion to a halt, leaving September inflows at a mere $86.2 million. Though these reflect caution, market analysts are watching Ethereum’s exchange supply dynamics very closely.
CryptoQuant observed that spot exchange ETH reserves are continuously dwindling, something that has been a historical precursor to upsurges. Investors have been transferring coins to self-custody or to staking, lowering sell-side liquidity.
Still, price has remained relatively even, as purchases have been countered by an equivalent amount of selling pressure. Analysts believe that once wider demand sets in, declining reserves may catalyze a strong upward movement.
Solana and XRP Provide a Bright Spot
All assets did not suffer. Solana was the outlier with $291 million inflows, remaining investors’ favorite due to development activity, as well as the rise in ecosystem support. XRP also saw $93.1 million inflows, as seen partly due to expectations around future ETF launches.
Even these assets defied the wider trend, providing some glimmer of strength amidst the otherwise difficult week. Looking ahead, the direction depends significantly on the change in macroeconomic policy and investors’ sentiment.
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