Digital asset investment products saw outflows amounting to $528 million last week, marking the first downturn in four weeks.
The exodus is believed to be a response to mounting concerns over a potential recession in the United States, compounded by geopolitical uncertainties and consequent widespread liquidations across various asset classes, CoinShares said in a recent report.
The report noted that trading volumes in exchange-traded products (ETPs) reached $14.8 billion, constituting a lower-than-average share of the total market at 25%.
$10B Wiped Off of ETPs After Friday’s Market Close
After Friday’s market close, the digital asset market saw a correction that resulted in a substantial $10 billion decline in total ETP Assets under Management (AuM).
Geographically, the bulk of the outflows were concentrated in the US, with outflows totaling $531 million.
Germany and Hong Kong also experienced outflows amounting to $12 million and $27 million, respectively.
Conversely, Canada and Switzerland seized the opportunity presented by price weaknesses, recording inflows of $17 million and $28 million, respectively.
According to CoinShares, digital asset investment products saw their first outflow of funds in four weeks, totaling $528 million. CoinShares believes this is a response to the US recession, geopolitical concerns and widespread market liquidation. Bitcoin funds outflowed $400…
— Wu Blockchain (@WuBlockchain) August 5, 2024
Bitcoin encountered significant outflows totaling $400 million, a stark reversal following five consecutive weeks of inflows.
Concurrently, short-bitcoin products observed measurable inflows for the first time since June, amounting to $1.8 million.
Similarly, Ethereum witnessed outflows totaling $146 million, contributing to net outflows of $430 million since the launch of ETFs in the US.
Notably, recent positive inflows of $430 million from newly launched US ETFs were counterbalanced by outflows of $603 million from the established Grayscale trust.
Minor outflows were also observed in European ETPs.
Moreover, blockchain equities sustained outflows, with an additional US$18 million exiting the market last week, aligning with the broader trend of outflows from tech-related ETFs.
Bitcoin Lost 15% Last Week
Bitcoin concluded the week at approximately $58,150, signifying a 14.8% decline from the previous week.
A volatile market environment saw BTC briefly plummet below $50,000 before a partial recovery to around $52,000.
In the realm of ETFs, BTC Spot ETFs experienced modest outflows of approximately $80 million over the week, primarily intensifying on Friday amidst the sell-off.
The reversal contrasts with July’s positive momentum, where BTC ETFs had witnessed robust net inflows, Matteo Greco, Research Analyst at Fineqia International, said in a recent note.
Despite this setback, the cumulative net inflow since the inception of BTC Spot ETFs remains near its all-time high at $17.5 billion.
Meanwhile, net inflows in the newly launched Ethereum Spot ETFs were offset by significant outflows from the Grayscale Ethereum ETF (ETHE), resulting in a net outflow of approximately $500 million.
“This mirrors the pattern seen after the BTC Spot ETFs launch, although current market sentiment is more cautious, resulting in slower inflows and higher outflows,” Greco said.
He added that the prevailing negative market trajectory can be attributed to various macroeconomic factors.
The Bank of Japan’s (BOJ) decision to raise interest rates for the first time in 17 years due to concerns over the Yen’s purchasing power decline against the US Dollar has triggered apprehension within risk-on asset markets, prompting widespread sell-offs.
Additionally, escalating tensions in the Middle East, particularly between Israel and neighboring nations, have added to the prevailing market unease, with fears of further escalation prompting precautionary measures among concerned countries.
