Crypto funds hit by record outflows last week, wiping out all inflows

Bitcoin posted a sharp weekly outflow for the 5th consecutive week as institutional investors continued to pull money out of cryptocurrency products and funds amid an ongoing decline in prices.

CoinShares’ weekly survey shows a hefty $225 million worth of net outflows for crypto investment products last week. The figure represents 1 percent of total assets under management (AuM) and was 10 percent lower on a weekly basis.  The outflows have also wiped out all the inflows seen this year, bringing total outflows in this five-week run to $82 million.

Bitcoin led the tally with $244 million outflows during the week, the largest weekly outflow since May 2019. With overall sentiment on cryptocurrencies turning cautious as the digital asset’s 2023 rally hit a wall, CoinShares writes that it is difficult to ascertain the precise reason for this other than the hawkish rhetoric from the Federal Reserve and the recent price decline.

Short bitcoin funds also saw outflows totaling $1.2 million, although it is now the investment product with the largest inflows year-to-date of $49 million. Regionally, the outflows were fairly evenly split between North America and Europe as the negative sentiment was broad.

“While the outflows are the largest on record, they aren’t when expressed as a percentage of total AuM, that record was in May 2019 when $51m of outflows were seen which represented 1.9% of AuM. It highlights just how much total AuM has risen since May 2019 (816%),” the report states.

The decline in March, noted the asset manager, marked a reversal of the recent trend that included two straight months of inflows, marking the quickest pace of withdrawals in at least a year. 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 $11 million, entering its fifth week of outflows, but to a much lesser extent of $3 million year-to-date.

The AUM into the second largest cryptocurrency in terms of market capitalisation stood at $6.6 billion. Total assets under management were $26 billion as of last week, retracing back to levels seen at the beginning of 2023.

Breaking down the latest statistics, Coinshares said minor inflows were seen in some altcoins’ investment products. Solana and XRP were the best performers with inflows of $0.4 million and $0.30 million respectively.