Institutional investors have kept on moving funds out of cryptocurrency investment products over the past week, marking a fifth consecutive week of outflows that has now reached a cumulative $232 million. The outflow represents a 0.7% decrease in total assets under management.
According to CoinShares’ latest Digital Asset Fund Flows report, the volume of cryptocurrency investment product transactions amounted to $900 million over the past week, a significant 40% decline from the year’s average. Similarly, trading volumes across trusted exchanges in the broader market plunged to a new low since late 2020, standing at a mere $20 billion for the week.
CoinShares’ report details that Bitcoin, the flagship cryptocurrency, was at the epicenter of negative sentiment, and experienced $33 million in outflows that represent a continuation of the trend observed over the past five weeks.
Surprisingly, there were also minor outflows of $1.3 million from Short-bitcoin – an investment strategy that benefits from falling bitcoin prices. Combined, these two types of investment products have seen outflows totaling $235 million over the last five weeks.
The reason behind the negative sentiment toward both long and short investment products remains a topic of speculation among analysts. While some attribute this trend to ongoing regulatory concerns and market volatility, others point toward broader macroeconomic factors that may be influencing investor sentiment.
Interestingly, amidst this downturn, altcoins – cryptocurrencies other than Bitcoin – have managed to buck the trend, albeit with one notable exception. Ethereum, the second-largest digital currency by market capitalization, reported an outflow of $1 million. However, other altcoins, including Avalanche and Litecoin, registered inflows of $700,000 and $300,00, respectively.
Blockchain equity ETFs, investment funds that track a basket of blockchain-based companies’ stocks, recorded their second consecutive week of minor outflows, shedding $2 million last week.
As CryptoGlobe reported Mike McGlone, senior macro strategist at Bloomberg Intelligence, recently revealed he considers there’s potential for a significant Bitcoin downturn that could see the cryptocurrency’s price drop back down to $7,000.
Meanwhile, Tether, the firm behind the leading stablecoin USDC, has made a strategic decision to invest a significant portion of its operating profits into Bitcoin.
According to Tether’s announcement, the company will initiate a policy of consistently allocating up to 15% of its net realized operating profits toward purchasing Bitcoin (BTC).
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