Crypto ETP outflows hit $528M amid recession fears and market turbulence

Crypto-related investment products experienced outflows of $528 million, ending a four-week streak of inflows, according to CoinShares’ latest weekly report.

James Butterfill, the head of research at CoinShares, explained that the outflows were triggered by concerns about a potential US recession, geopolitical issues, and a broader market liquidation impacting significant cryptocurrencies.

Meanwhile, the firm noted that the exchange-traded products (ETPs) had a below-average trading volume of $14.8 billion, representing only 25% of the total market.

Last week’s market correction also reduced the value of ETPs’ assets under management (AUM) by $10 billion to $89.6 billion.

Bearish sentiments emerge

Butterfill pointed out that bearish sentiments began to emerge on Bitcoin last week, with the flagship digital asset recording outflows of $400 million for the first time in five weeks.

Conversely, short-Bitcoin products recorded a $1.8 million inflow, suggesting investors’ sentiment shifted toward betting against an upward BTC price movement.

This move is entirely not surprising as US Bitcoin exchange-traded funds (ETFs) saw net outflows of more than $80 million last week, driven by Grayscale’s Bitcoin Trust (GBTC), Fidelity’s FBTC, and Ark 21 Shares’ ARKB outflows of $806 million, $193 million, and $123 million, respectively.

The bearish sentiments also extended to Ethereum, which saw outflows totaling $146 million. This brings the total net outflows from the digital asset to $430 million since the launch of spot Ethereum exchange-traded funds (ETFs) in the US. European ETPs also contributed to the overall negative flows as they experienced minimal outflows from their funds.

Butterfill explained that the outflows were primarily influenced by the $603 million recorded from Grayscale’s Ethereum Trust (ETHE), which overshadowed the $430 million inflow seen by the other Ethereum ETF issuers.

Meanwhile, other cryptocurrencies like Cardano and BNB saw minimal activity in ETP trading, with Solana being an exception, experiencing outflows of $2.8 million.

Regionally, the US experienced an outflow of $531 million, while Germany and Hong Kong saw $12 million and $27 million outflows, respectively. Conversely, Canadian and Swiss investors capitalized on the market dip, with inflows of $17 million and $28 million, respectively.

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