According to James Butterfill, Head of Research at CoinShares, a European digital assets investment firm, the recent trend has been characterized by significant outflows from digital asset investment products. The total outflows for the week amounted to $107 million, marking a continuation of the profit-taking trend that has been gathering pace in recent weeks.
Per Butterfill’s blog post, which was published earlier today, Bitcoin, the world’s largest cryptocurrency by market capitalization, was the primary focus of these outflows. Investors withdrew a total of $111 million from Bitcoin, marking the largest weekly outflows since March. This period was notable for the escalating regulatory scrutiny in the U.S., which has significantly influenced the dynamics of the cryptocurrency market.
However, in a surprising turn of events, the outflows into short Bitcoin positions, which have been consistent for 14 weeks, have come to a halt. This development could indicate a potential shift in investor sentiment, suggesting that the bearish outlook on Bitcoin might be slowing down.
Despite the significant outflows from Bitcoin, the altcoin market has shown signs of resilience. Solana, for instance, stood out with the largest inflows, amounting to $9.5 million. This marks the most substantial single week of inflows for Solana since March 2022. Other altcoins such as XRP and Litecoin also saw inflows, albeit on a smaller scale, with $0.5 million and $0.46 million respectively. However, not all altcoins fared well, with Uniswap and Cardano experiencing outflows of $0.8 million and $0.3 million respectively.
The outflows were primarily concentrated in two ETP providers located in Germany and Canada, which saw outflows of $71 million and $29 million respectively.
Overall, as Butterfill notes, the digital asset market appears to be in the midst of the summer doldrums, with weekly trading volumes in investment products 36% below the year-to-date average. The broader on-exchange market volumes have suffered more, down 62% relative to the year-to-date average.