- A recent report showed that cryptocurrency investment products suffered an unprecedented loss of $ 207 million in outflows last week.
- This is the fourth consecutive week of departure, which began in mid – December and ended with a 17 – week streak.
Over the past week, almost every cryptocurrency investment product experienced an outflow that reached a record $ 207 million.
Specifically, the cryptocurrency investment products that follow Bitcoin (BTC) registered the highest number of exits, at $ 107 million. The latest CoinShares report attributes this to «a direct response to FOMC minutes highlighting U.S. Federal Reserve concerns about rising inflation, and investor fears about rising interest rates». In the past month, according to the report, there has also been a 25% trade volume with Bitcoin, reflecting more activity from institutional investors than usual.
Change in cash flow of cryptocurrency investment products
Other crypto investment products that saw exits last week include Ethereum, which saw a $ 39 million leak. This results in a total five-week outflow of $ 200 million. This exceeds the share of Bitcoin outputs, which make up 1.4 percent of all AUMs. Multi-asset funds had outflows of $ 37 million, suggesting less investor interest in selling. Blockchain’s equity investment products also saw $ 10 million in exit during the week.
Cryptocurrency investment products tracking XRP, Solana, and Litecoin saw inflows of less than $ 0.8 million, $ 0.5 million, and $ 0.3 million. Polkadot-based investment products balanced sales and purchases with zero net effect.
Last week was the biggest exit from a trend that started in mid – December. The 4 – week exits now amount to $ 456 million, or 0.8% of total managed assets (AUM), or about twice the combined total exits of the previous three weeks. In addition, the flight of funds halts the $ 3.6 billion inflows recorded from August 2021. These inflows were fixed for 17 weeks.
The big picture
For most of the last year, cryptocurrency investment products posted significant gains. A full year saw 9.3 billion in encrypted inflows from institutional investors, a 36 percent improvement from $ 6.8 billion in 2020.
However, that year ended with three consecutive weeks of trips. Last week of 2021 outflows decreased by $ 32 million, compared to $ 86 million the previous week and $ 142 million the previous week. These three-week outflows amounted to $ 260 million, or 0.4% of AUM.
In addition, these exits coincide with the broadest correction in the market, in which the main digital asset, BTC, is trading alongside about $ 42,000. The fall has been partly attributed to the recent civil unrest in Kazakhstan following rising fuel prices. Some cryptanalysts predict such a collapse this year, and perhaps something worse. However, others expressed their optimism that, despite the fall, the cryptocurrency market would rebound and BTC would hit $ 100,000 in one year.