Digital asset investment products have witnessed substantial outflows, amounting to a staggering $168 million. It marks the largest outflow observed since the regulatory crackdown on crypto exchanges in the U.S. back in March 2023. The cryptocurrency that bore the brunt of this exodus was none other than the renowned Bitcoin, which experienced an outflow of $149 million within the span of just one week.
According to Coinshares’s Digital Asset Fund Flows Weekly Report, the current month of August has seen outflows surge to a cumulative total of $278 million. It comes at a time when the cryptocurrency market has been characterized by notably low trading volumes. In the past week, trading activity for investment products amounted to $1.3 billion, falling short by 16% when measured against the yearly average.
The prevailing pessimistic sentiment within the market can be attributed to the growing realization that introducing a spot-based Bitcoin Exchange-Traded Fund (ETF) in the U.S. might face delays beyond initial expectations. The U.S. Securities and Exchange Commission (SEC) recently announced setbacks in this regard, further exacerbating negative market sentiment.
A notable aspect of the recent outflows is their global distribution, indicating that the negative sentiment is widespread and not limited to any specific region. Even countries that have been particularly active in the cryptocurrency space, such as Germany and Canada, experienced substantial outflows of $68 million and $61 million, respectively.
Bitcoin Yearly Net Flow Remains Positive
Unsurprisingly, Bitcoin remained the focal point of these outflows, accounting for a substantial portion of the total. However, despite these setbacks, the net flow of funds into the cryptocurrency for the year remained in positive territory, amounting to $265 million.
It’s worth noting that a significant number of investors opted to liquidate their short positions, contributing to the observed outflows. Over the last 18 weeks, these outflows have constituted a staggering 89% of the total assets under management (AuM).
In contrast to the broader trend, Ethereum stood out as the only altcoin to witness significant outflows. The cryptocurrency experienced an outflow of $17 million. On a slightly positive note, XRP and Litecoin attracted minor inflows of $0.5 million and $0.44 million, respectively.
However, the latest market dynamics and the substantial outflows observed across the cryptocurrency spectrum underscore the challenges and uncertainties that continue to shape the digital asset landscape.
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