Crypto ETPs Face Major Outflows Amid Bitcoin and Ethereum Sell-Off
By: Eliza Bennet
The cryptocurrency market has recently witnessed dramatic shifts as digital asset investment products encountered significant outflows. According to a report by CoinShares, the latest data indicates that crypto exchange-traded products (ETPs) suffered outflows amounting to a staggering $1.43 billion, marking the most substantial withdrawal in recent months. These outflows arrive amidst a broader market sell-off led by dominant cryptocurrencies, Bitcoin and Ethereum. The recent developments highlight the ongoing volatility and investor apprehension about market conditions.
Amid the outflows, CoinShares reported that trading activity surged significantly, with volumes reaching $38 billion, nearly 50% above the typical yearly average. The initial phase of the week saw substantial withdrawals, primarily driven by investor concerns over potential monetary tightening from the Federal Reserve. James Butterfill, head of research at CoinShares, noted that approximately $2 billion exited the market at the week's start, reflecting the looming fears over further interest rate hikes.
As the week progressed, market sentiment experienced a turnaround, following Federal Reserve Chairman Jerome Powell's comments at the Jackson Hole Symposium. His statements were perceived as moderately dovish, resulting in a partial market recovery and contributing to Thursday and Friday's inflows of $594 million, which somewhat mitigated the week's overall losses.
The bearish trend predominantly affected Bitcoin and Ethereum, with Bitcoin facing a $1 billion decline and Ethereum witnessing $440 million in outflows. Nonetheless, Ethereum's longer-term month-to-date reports reveal substantial strength, with inflows reaching $2.5 billion compared to Bitcoin's $1 billion in outflows. Investors also showed interest in alternative digital assets such as XRP, Solana, and Cronos, which welcomed new investments, while others like Sui and Ton saw declines. This pattern underscores the diversified investor sentiment across various cryptocurrencies.
Geographically, the US was at the epicenter of these outflows, with US-based funds, including notable contributors like BlackRock’s iShares, leading with $1.3 billion leaving their portfolios. On the other hand, Europe, especially Sweden and Switzerland, also saw significant outflows. Conversely, regions such as Germany, Canada, and Hong Kong recorded modest inflows, providing a buffer against larger market withdrawals.
