Cryptocurrency funds snap 17-wk run of inflows, post largest outflows on record
NEW DELHI: Crypto funds saw outflows totalling $142 million during the week ended 17 December, the largest weekly outflow on record and the first sell-off after a 17-week run of inflows, according to digital asset manager CoinShares.
The largest previous outflow on record was in early June 2021 where weekly outflows totalled $97 million.
The sell-off in digital asset investment products or crypto funds, which are generally preferred by institutional investors, came amid widespread correction in the crypto market.
Amid risk-off sentiment in the global financial markets due to rising inflation and surge in fresh covid cases across the world, bitcoin has slumped from a high of around $69,000 to below $46,000 over the last month or so.
During December 11-17, price of the world’s biggest crypto asset, bitcoin, slumped by around 6%. Notably, bitcoinbased funds saw outflows totalling $89 million during this period but was well below the outflows seen in June where they were as much as $150 million. While this outflow appears alarming, according to the digital asset manager there are several points to consider.
“First, it comes at a time when there have been considerable outflows across all risk assets following the recent US Federal Reserve statement on tapering.
Second, outflows represent only 0.23% of total assets under management (AUM), and from an historical perspective are small relative to the outflows in early 2018 where weekly outflows represented up to 1.6% of AuM,” CoinShares said in a report.
Additionally, the outflows have come at a time of record yearly inflows peaking at $9.5 billion, relative to inflows totalling $6.7 billion in 2020.
However, the overall selloff was softened by buying in altcoins, a cumulative term to define cryptocurrencies that came after bitcoin, such as Solana, Polkadot and multi-asset investment products, which saw net buying totalling $6.7 million, $2.5 million and $1.5 million, respectively.
The biggest altcoin, Ethereum, however, saw record outflows totalling $64 million during the week ended 17 December.
In terms of crypto fund providers, the world’s biggest digital asset manager, Grayscale, remained steady with total assets under management (AUM) of $43.68 billion, followed by CoinShares at $4.99 billion and 3iQ with an AUM of $2.60 billion. The total AUM of crypto fund providers was at $ 63.02 billion for the week.
Meanwhile, cryptocurrency exchange Binance said it had signed a cooperation deal with Dubai World Trade Centre Authority, which is working to set up a virtual asset ecosystem.