Investors transfers $424 million out of bitcoin funds in six weeks
Despite bitcoin’s decent surge last week, which took the primary cryptocurrency up 70% from the year’s low, digital asset investment products saw outflows for the 6th consecutive week.
Outflows from digital asset investment products totaled $95 million last week, which took the 5-week total capital flight to as high as $406 million, according to a recent CoinShares report.
The crypto asset management firm wrote that the drawdowns were in stark contrast to the broader market and suggest it was, in part, due to the need for liquidity rather than negative sentiment.
The negative sentiment was primarily focused on Bitcoin, seeing outflows in investment products totaling $113 million last week. Investors piled $424 million out of Bictoin investment funds over the last 6 weeks. Cash transferred out of bitcoin funds in March virtually erased all inflows this year and pushed assets in such investment vehicles down to $22 billion.
However, the last week’s overall negative tone among investors was not expressed in bitcoin’s price appreciation to its highest since mid-2022. Conversely, short-Bitcoin products saw record inflows of $35 million in the same week, but its AuM fell by 13% over the same period.
“It is evident this sentiment is contrarian relative to the rest of the crypto market, but it may be driven, in part, by the need for liquidity during this banking crisis, a similar situation was seen when the COVID panic first hit in March 2020,” the report states.
Minor inflows were observed in altcoins. Aside from Ethereum, which saw $13 million in outflow last week, Solana and XRP bucked the trend with inflows of $1.3 million last week. CoinShares suggested that this positive sentiment provides further credence to the notion that the outflow in the larger crypto assets were driven by the need for liquidity.
CoinShares is Europe’s largest digital asset investment firm. Earlier last month, the company posted fourth-quarter earnings that showed a marked downturn when compared with the third quarter.
CoinShares also confirmed its previously-announced exposure to the bankrupt crypto exchange FTX, which was reported at roughly $31 million. Despite this, CoinShares CEO Jean Marie Mognetti said the losses indicate a “limited exposure,” and the firm is still in a state of “robust financial health.” He added that they had materially reduced exposure to FTX ahead of the exchange’s decision to freeze further withdrawals.
