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Crypto Outflows Continue for 5th Week on Weak BTC Sentiment: CoinShares

Key Takeaways
  • Bitcoin-related funds hit hardest as digital asset investment products see $232 million in outflows over five weeks, driven by weak sentiment.
  • Institutional investors show continued caution towards digital assets, resulting in the fifth consecutive week of outflows.
  • Germany leads in outflows by exchange country, despite the approval of favorable regulations in the European Union.
23-May-2023 By: Aditi Tiwari
Crypto Outflows Cont

Bitcoin-related funds hit hardest as digital asset investment products see $232 million in outflows over five weeks, says CoinShares' report. 

Institutional investors continued to show poor sentiment toward digital assets, leading to yet another week of outflows. Between May 15 and May 19, crypto funds witnessed outflows of $32 million, making it the fifth consecutive week of negative flows.

CoinShares' Head of Research, James Butterfill, highlighted that Bitcoin was the main focus of negative sentiment over the past five weeks. This latest week of institutional shedding brought the total outflows to $232 million during the period. Throughout the five-week period from April 21 to May 19, the price of Bitcoin declined approximately 4.8%, settling at $26,842. As of the time of this writing, Bitcoin was valued at $27,021, as reported by CoinGecko.

Gola pointed to the upcoming decision on interest rate hikes by the Federal Reserve in June as a significant event that could influence the market.

Regarding Bitcoin investment products, Butterfill noted that outflows for such products reached $112 million this year, with 90% of the outflows occurring in May alone. Short-Bitcoin products also experienced $34.8 million worth of outflows in May. However, the reasons behind the coordinated negative sentiment for both long and short-investment products remain unclear.

Institutional Caution Leads to Digital Asset Outflows Amidst Bitcoin's Stagnation.

In the most recent week, BTC product outflows amounted to $33 million, partially offset by inflows of $1.6 million to multi-asset products, $300,000 to Litecoin products, and $200,000 to XRP products.Investors decreased their exposure to short-Bitcoin funds by $1.3 million, resulting in the second-largest outflows observed for the week. Outflows of Ether-related products were closely behind, totaling $1 million.

Germany experienced the highest outflows by exchange country, with a total of $24.1 million for the week, followed closely by the United States. Interestingly, despite the European Union's approval of the progressive Markets in Crypto-Assets (MiCA) regulation on May 16, which was expected to be positive for the European crypto market, the outflows from Germany continued.

The persistent outflows from digital asset investment products reflect the prevailing cautious sentiment among institutional investors. Bitcoin's price stagnation and uncertainty surrounding the future market direction have contributed to the outflows. The coordinated negative sentiment towards both long and short investment products further adds to the complexity of the situation. As regulatory developments and market triggers unfold, it remains to be seen how investor sentiment will evolve in the coming weeks.

Also read- Defendants in $18M Fraud Case Claim SEC Lacks Crypto Authority

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