Digital asset funds have seen negative money flows for six consecutive weeks, according to a recent CoinShares weekly report.
As of March 17th, there was a net outflow of $94.7 million from all crypto funds. The outflow from digital asset funds last week is notable as major cryptocurrencies, such as bitcoin, rebounded amid concerns over the banking system.
The report shows that digital asset investment products experienced outflows for six consecutive weeks, totalling $95 million, with the five-week total being $406 million, representing 1.2% of total assets under management (AuM). However, AuM has risen by 26% over the past week and now stands at $33 billion, which is the highest it has been since the Three Arrows Capital collapse in June 2022. Trading volumes in investment products were also double the average, reaching $2.6 billion.
CoinShares suggested that the outflows from digital asset funds may be due to investors’ need for liquidity during the ongoing banking crisis, rather than negative market sentiment. The report drew a parallel with the early days of the March 2020 pandemic, during which a similar situation was witnessed.
By asset, there was a net outflow of $112.8 million from Bitcoin funds last week, while $12.7 million was withdrawn from the Ethereum fund. In contrast, $34.7 million flowed into short bitcoin funds that bet on falling bitcoin.
Interestingly, Litecoin, Solana, Polygon, and XRP funds recorded small inflows, while Bitcoin and Ethereum funds experienced outflows. CoinShares explained that the positive flow of funds from altcoin funds also supports the view that outflows from bitcoin and ethereum funds are due to liquidity needs.
In conclusion, the recent CoinShares report shows that digital asset funds have experienced negative money flows for six consecutive weeks. While this could be a cause for concern, the report suggests that the outflows may be driven more by investors’ need for liquidity during the ongoing banking crisis, rather than negative market sentiment. It will be interesting to observe how the market develops in the upcoming weeks and months, and whether the trend of outflows will continue or change.
Read more:
- Bitcoin Outflows Continue As Regulatory Concerns Weigh On Investors: CoinShares
- Veteran Trader Peter Brandt Issues Warning, Suggesting Bitcoin Price May Drop To Close The Gap At $20,000