Digital asset investment products have experienced a shift from positive to negative flows as the market retreats. CoinShares, an asset manager, reported a total outflow of $6.5 million from crypto funds last week, reversing the trend of inflows seen in the previous four weeks. Although this outflow is relatively minor compared to the $742 million of inflows in the prior four weeks, it indicates a change in sentiment among institutional investors.
Bitcoin witnessed the largest outflows, with $13 million leaving funds and products tied to the cryptocurrency. Additionally, short BTC investment products experienced outflows for the 13th consecutive week, totaling $5.5 million. The decline in trading volumes last week further contributed to the negative sentiment. Volumes were below the year-weekly average at $1.2 billion, less than half of the previous week’s $2.4 billion.
The regulatory landscape in North America played a significant role in the negative sentiment surrounding crypto. However, there were some positive developments in the institutional investment space. Professional traders shifted their focus from Bitcoin to Ethereum, with ETH-based funds experiencing an inflow of $6.6 million for the week. This shift suggests that sentiment, which has been poor this year, may be slowly turning around.
Ripple-related funds also saw $2.6 million of inflows, driven by the firm’s recent partial victory against the SEC and a boost in XRP prices. Other cryptocurrencies such as Solana, Uniswap, and Polygon also saw inflows, totaling $1.1 million, $0.7 million, and $0.7 million, respectively.
Despite these positive developments, the overall picture indicates a potential switch back to negative sentiment. Previous instances of low institutional flows following larger ones have often led to trend reversals. Additionally, the crypto market continues to experience lethargy, with low volatility, volumes, and liquidity. The total market cap has dropped by 1.4% to $1.21 trillion, remaining within its tight multi-month range.
Bitcoin prices have declined by 2.3%, approaching $29,000, and Ethereum is following suit with a 1.2% slide to $1,847. Most altcoins are in the red, except for Dogecoin, which has seen a 9% increase in value.
In summary, institutional crypto fund flows have turned negative as the market retreats. The shift from inflows to outflows, particularly in Bitcoin, reflects a change in sentiment among institutional investors. While there have been some positive developments, such as the shift towards Ethereum and inflows into Ripple-related funds, the overall market remains stagnant with low volatility and trading volumes. This could potentially signal a return to negative sentiment in the near future.