Digital Asset Funds Record $500 Million Outflows Amid Market Market Decline

Digital asset investment products have recorded a massive $500 million in outflows in the last seven days following a week of sell-offs as the wider market struggled.

A recent CoinShares Digital Asset Weekly Funds Flow Report shows huge outflows across Bitcoin (BTC) and multiple altcoins with the United States posting the highest exits weeks after a spot BTC ETF was approved by the Securities and Exchange Commission (SEC).

US$500m outflows last week, US$2.2bn of that being Grayscale. Outflows look to be slowing though. While new US ETF issuers saw US$1.5bn inflows.https://t.co/THr3N7DNaP

— James Butterfill (@jbutterfill) January 29, 2024

Outflows from Grayscale have hit $5 billion since the SEC’s decision on January 11, spurring further exits from other regions and leading to falling prices across the crypto market.

Last week, Grayscale’s outflows stood at $2.2 billion while newly approved spot ETFs saw weekly inflows of $1.8 billion, raising the total number since January 11 to $5.94 billion.

In addition to Grayscale’s numbers, the total inflow is now at $807 million, with CoinShares analysts stating that data show outflows may subside as daily volumes reduce following a positive uptick in the market.

“The outflows in Grayscale last week totaled $2.2 billion, although data suggests outflows are beginning to subside as the daily total continued to reduce towards over the week,” wrote analysts.

The price correction recorded immediately after the rollout of spot Bitcoin ETFs can be linked to Bitcoin’s seed capital acquisition before January 11 with heightened anticipation of the approval.

Renewed institutional investor appetite poured funds into Bitcoin in the third and fourth quarter of 2023 leading to an upward movement in inflows to cryptocurrency funds before the approval.

Bitcoin and Ethereum Post Outflows

Bitcoin products saw an outflow of $479 million leading the pack with the largest numbers. As expected, short Bitcoin posted inflows of $10.6 million amid bearish activity dominating last week’s narrative.

At press time, Bitcoin is exchanging hands at $42,059 and has gained 4% in the last seven days, far behind where many analysts and commentators thought it would be after a spot BTC approval. There’s still time for Bitcoin to get there, however.

Analysts at Matrixport projected a price increase to $50,000 following a potential approval on the back of inflows seen in December, for example.

Ethereum (ETH) recorded $38.8 million taking down its monthly inflows to $3.1 million and its Assets Under Management (AUM) at $9.6 billion. Polkadot (DOT) and Chainlink (LINK) saw outflows of $0.7 million and $0.6 million respectively. Multi assets and Blockchain equities notched inflows of $7.1 million and $17 million respectively.

Solana (SOL) has seen inflows of $3 million but its monthly total is still $10.2 million in the red.

Geographically, the United States saw the majority of the outflows, totaling $408.8 million, while Switzerland and Germany recorded outflows of $59.8 and $31.7 million respectively. The United States still controls $37.6 billion in AUM while Canada and Switzerland both hold above $3 billion.