Digital Asset Investment Funds Experience Weekly Outflows, But Bitcoin Bucks the Trend

Digital Asset Investment Funds Experience Weekly Outflows, But Bitcoin Bucks the Trend

Crypto News – Investment products within the cryptocurrency sector, managed by firms such as Grayscale, 21Shares, Bitwise, and ProShares, witnessed outflows totaling $11.2 million in the past week. This adds to a consecutive streak of several weeks, amassing a total outflow of $342 million.

However, there is a notable decrease in the outflow compared to the prior week, which saw a substantial $168 million leaving the sector. Some optimism emerges as Bitcoin-related products appear to be defying the overall trend of outflows, prompting hopes of a potential shift in negative market sentiment. This perspective is shared by James Butterfill, Head of Research at CoinShares, as indicated in the latest report from this digital asset management firm.

The year 2023 has been marked by substantial fluctuations in investor flows, primarily attributed to persistent concerns and hopes regarding regulatory developments in the digital asset space. The events of the past week encapsulated this sentiment.

The week commenced with elevated expectations for the approval of a spot Bitcoin exchange-traded fund (ETF) in the United States. This optimism surged following a pivotal decision by the United States appeals court, which overturned the Security and Exchange Commission’s previous block on Grayscale’s ETF proposal.

Nevertheless, overall market sentiment faced a setback when the SEC announced the postponement of its decision on seven spot Bitcoin ETF applications from prominent entities like BlackRock, Fidelity, VanEck, WisdomTree, Invesco, Bitwise, and Valkyrie. The delay was extended until mid-October.

Despite the subdued flow activity, trading volumes spiked significantly, reaching $2.8 billion for the week. This figure is approximately 90% higher than the year-to-date average, indicating heightened market activity. Remarkably, despite the regulatory uncertainties, year-to-date digital asset investment products maintain a net inflow position, standing at $165 million.

While the broader digital asset fund market continued to experience outflows, Bitcoin-related products defied this trend, attracting inflows totaling $3.8 million in the previous week. Conversely, short Bitcoin positions continued to witness outflows for the 19th consecutive week, with a total outflow of $3.3 million, resulting in a 48% reduction in total assets under management from this year’s peak.

Notably, Solana investment products remained an exception, reporting inflows for the ninth consecutive week, amassing $0.7 million. However, investment products related to Polygon and Ethereum (Ether) faced outflows amounting to $8.6 million and $3.2 million, respectively.

In terms of regional trends, Germany experienced the highest outflows, totaling $26.9 million, while Switzerland recorded the most substantial inflows, amounting to $14.8 million. In contrast, the United States saw minor inflows, totaling $1.9 million.