Executive Summary

Crypto investment products registered their largest weekly outflows since February, totaling $2 billion USD. This shift reflects a decreased global risk appetite and the impact of uncertain monetary policies.

Key Highlights

  • Crypto exchange-traded products (ETPs) experienced $2 billion in outflows last week, nearly 71% higher than the $1.17 billion recorded the previous week.
  • This marks the third consecutive week of outflows, extending the cumulative outflow streak to $3.2 billion.
  • CoinShares’ head of research, James Butterfill, attributes the outflows to monetary policy uncertainty and selling by crypto-native whales.
  • As a result, total assets under management (AUM) in crypto ETPs decreased to $191 billion, a 27% decline from their peak of $264 billion in October.
  • The United States accounted for 97% of the outflows, totaling $1.97 billion, while Germany was an outlier with $13.2 million in inflows, defying the global trend.

Geographic Impact

While US-based crypto ETPs bore the brunt of the outflows, the trend was reflected in many other countries. Switzerland and Sweden recorded outflows of $39.9 million and $21.3 million, respectively. Meanwhile, Hong Kong, Canada, and Australia saw combined outflows of $23.9 million.

Cryptocurrency Impact

Bitcoin (BTC) and Ether (ETH)-based ETPs were hit the hardest. Bitcoin-based ETPs saw nearly $1.4 billion in funds exiting last week, approximately 2% of their total AUM. Ether ETPs, on the other hand, saw nearly $700 million in redemptions, accounting for roughly 4% of total assets.

Investor Sentiment Shift

While single-asset ETPs experienced significant outflows, products that spread exposure across diversified crypto baskets saw inflows. According to CoinShares, multi-asset ETPs have seen $69 million in inflows over the last three weeks. This suggests investors are seeking reduced volatility and broader coverage amidst the uncertainty. Apart from multi-asset coverages, short-bitcoin funds – ETPs that bet on Bitcoin’s decline – saw $18.1 million in inflows in the same period. This indicates a slight increase in hedging activity among investors.

Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

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