Digital asset funds see a second week of outflows as the crypto market consolidates

(Kitco News) – Digital asset investment products saw their second week of minor outflows last week as a total of $21 million flowed out of various funds, with the bulk of redemptions occurring with Bitcoin-related products.

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According to the latest Digital Asset Fund Flows report from CoinShares, trading volumes for digital asset investment products were below average last week, with $915 million worth of transactions occurring versus the 2023 weekly average of $1.5 billion.

“This was reflected in the broader Bitcoin market, which saw a total of US$16bn traded last week on trusted exchanges, compared to the weekly average this year of US$52bn,” said James Butterfill, head of research at CoinShares. “At the half-year mark, digital assets have seen just under US$0.5bn of inflows.”

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Weekly fund flows. Source: CoinShares

Out of the $21 million worth of outflows, “93% were from long-Bitcoin investment products, while short-Bitcoin saw its 14th consecutive week of outflows totaling $3.1 million,” Butrefill said. “This suggests investors have been taking profits in recent weeks, with the sentiment for the asset overall remaining supportive.”

Fund flows by provider. Source: CoinShares

North America accounted for the majority of outflows, with $11 million occurring in both U.S. and Canadian-based investment products. Outflows from Switzerland and Sweeden accounted for $3.2 million and $2.6 million of the total, respectively, and Germany saw inflows of $5 million.

Fund flows by region. Source: CoinShares

While the top crypto continues to see funds withdrawn, altcoins have gained favor with investors as Cardano, Solana, and XRP-based products all saw an increase in their assets under management.

Fund flows by asset. Source: CoinShares

The total inflows for these products was $3 million, with Cardano leading the way with an increase of $0.64 million. Ethereum and Avalanche saw minor outflows totaling $1.9 million and $0.4 million, respectively.

An outflow of funds from Bitcoin is common after notable increases in price, and oftentimes, some of these funds make their way into the altcoin market as traders attempt to capitalize on “altcoin season,” which is typified by an increase in altcoin prices as funds that were invested into BTC are rolled over into lower-cap tokens.

Checking in on the performance of the crypto market on Tuesday, Bitcoin continues to struggle to gain momentum and briefly dipped below $29,000, while the altcoin market has also fallen under pressure due to yesterday’s hack of Curve Finance and concerns about the legal standing of the recent ruling that XRP is not a security.

The concerns about the XRP ruling stem from comments made by the judge overseeing the Securities and Exchange Commission’s (SEC) lawsuit against Terraform labs that pushed back against the XRP decision, suggesting to some that the ruling could be overturned if challenged in the U.S. Courts of Appeal.