Crypto funds endure 8th consecutive week of capital flight
Bitcoin posted a weekly outflow as institutional investors continued to pull money out of cryptocurrency products and funds amid an ongoing regulatory headache, data from digital currency manager CoinShares shows.
CoinShares’ weekly survey of cryptocurrency investments shows that net outflows hit $88 million last week. The cumulative crypto exodus over this 8-week run has now reached $417 million, approaching the record 12-week outflow seen between April and June of 2022.
The asset manager also noted that an overwhelming majority, specifically 87% of the capital flight, was concentrated on a single provider, indicating a significant shift in investor sentiment towards that particular entity. Additionally, these outflows were primarily from North America-based investors, reflecting their cautious approach.
On the other hand, there were minor inflows of $9.2 million observed in Switzerland, suggesting some positive investor activity in that region. Conversely, Germany experienced outflows amounting to $9.4 million, indicating a decrease in investor interest in digital asset investment products in the country.
With overall sentiment on cryptocurrencies turning cautious as the digital asset’s searing rally hit a wall, Bitcoin led the tally with $52 million outflows during the week, contributing to a cumulative eight-week outflow of $254 million. These outflows represent approximately 1.2% of the total assets under management (AuM) in Bitcoin-related investment products.
In terms of short positions on Bitcoin, there were outflows of $1.1 million. The seven-week streak of outflows from investment funds betting against the primary cryptocurrency now accounts for approximately 44% of the AuM in this category.
The decline came as crypto prices have closely tracked declines in equities over the last two weeks as investors unloaded assets seen as speculative and higher risk. There has been more alignment between crypto and US stocks, particularly tech companies, because investors treat both assets as riskier investments with higher growth potential and risks.
Moreover, other assets including Ethereum saw outflows amounting to $36 million, marking the largest single week of negative net flows since the Merge in September. However, Ethereum has fared relatively better compared to Bitcoin, as the total outflows represent only 0.6% of the Assets under Management (AuM) for Ethereum-related investment products.
Altcoins, which have generally been less affected by the recent negative sentiment, saw mixed performance, with minor inflows observed in Litecoin, XRP, and Solana, while outflows were observed from Polygon. Interestingly, when considering the overall picture, altcoins have seen inflows year-to-date (with the exception of Tron), which contrasts with the outflows witnessed in Bitcoin and Ethereum.
