Cryptocurrency Products Experience Fifth Consecutive Week of Outflows, Sparking Pessimism

Cryptocurrency Products Experience Fifth Consecutive Week of Outflows, Sparking Pessimism

As of September 15, a total of $54 million has flowed out of cryptocurrency products. This shows that institutional interest in cryptocurrencies remains low against a backdrop of wider concerns about the global economy.

This trend is further underscored by the fact that there have been net outflows in eight of the last nine weeks, totaling $455 million. So far this year, inflows have amounted to just $51 million.

Meanwhile, “blockchain stocks” saw their sixth straight week of outflows, totaling $9.6 million last week, according to James Butterfill, head of research at CoinShares.

Bitcoin (BTC) continues to be the leading asset for outflows, with $45 million, or 85% of total outflows, last week. In addition, the “Short Bitcoin” product also saw $3.8 million in outflows, suggesting that short sentiment in the market is on the rise.

The “short Bitcoin” product attracted the most inflows, further confirming that the overall sentiment is negative. Geographically, negative sentiment was concentrated in the U.S., which accounted for 77% of the outflows, while countries such as Germany, Canada and Sweden were also hit by negative sentiment, Butterfield noted. Volume increased this week to $1 billion, up 42% from the previous week.

Overall, net outflows from digital asset investment products have totaled nearly $500 million over the past nine weeks, with last week’s net outflows totaling $54 million. This suggests that the cryptocurrency market is facing a certain amount of uncertainty, especially in light of increased global economic and regulatory pressures.

Notably, inflows into the ‘Short Bitcoin’ product proved to be short-lived, with $3.8 million in outflows last week. Despite this, the product remains the most popular investment option, with inflows totaling $12 million for the month to date.

On the other hand, Ether, despite its attractive investment fundamentals and high-demand equity incentives, saw net outflows totaling $4.8 million last week. In addition, some alternative currencies such as Coin (BNB) and Polygon (MATIC) also experienced small outflows, amounting to $3 million each.

However, some alternative currencies remained strong with Solana, Cardano and XRP attracting inflows of $7 million, $4.3 million and $1.3 million respectively.

Analysis of the latest data shows that almost all short-term Bitcoin holders are mired in losses, which has led to a drop in sentiment, Glassnode said, suggesting that the situation indicates a panic among investors with a low cost base for the first time since the collapse of FTX. While new capital and new investors are entering the market, the downward trend in sentiment continues, driven by macroeconomic conditions, regulatory pressures and uncertainty about market liquidity.

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