The cryptocurrency market experienced significant turbulence last week, as digital asset investment products saw a total of $305 million in outflows, reflecting a widespread wave of negative sentiment. According to a recent report by CoinShares, this downturn mirrors growing concerns across various regions and providers, driven primarily by stronger-than-expected economic data from the United States, which has diminished hopes for a 50-basis point interest rate cut by the Federal Reserve.
Bitcoin Leads the Exodus with $319M in Outflows
Bitcoin was the hardest hit during this exodus, with a staggering $319 million flowing out of Bitcoin-related investment products. Despite this, not all Bitcoin products suffered losses. Short Bitcoin investment products, which profit from declines in Bitcoin’s price, saw their second consecutive week of inflows, totaling $4.4 million. This marks the largest inflow for these products since March, signaling that some investors are betting on further declines in Bitcoin’s value.
Ethereum and Solana See Mixed Results
Ethereum, the second-largest cryptocurrency by market capitalization, also faced negative sentiment, with $5.7 million in outflows. Ethereum’s trading volumes remained stagnant, reaching only 15% of the levels observed during the U.S. ETF launch week.
In contrast, Solana, known for its high-speed transaction capabilities, managed to attract $7.6 million in inflows, bucking the overall negative trend in the market. This positive performance underscores Solana’s growing appeal despite the broader market downturn.
Blockchain Equities and Regional Inflows Offer a Silver Lining
Interestingly, blockchain equities, particularly those tied to Bitcoin mining, also defied the negative market sentiment, drawing $11 million in inflows.
Regionally, the United States bore the brunt of the outflows, with $318 million being pulled from digital asset products. Germany and Sweden also saw notable outflows of $7.3 million and $4.3 million, respectively. However, Switzerland and Canada provided a slight counterbalance to the overall negative trend, attracting minor inflows of $5.5 million and $13 million, respectively.
Major Cryptocurrencies End the Week on a Low Note
The week’s volatility was also reflected in the price movements of major cryptocurrencies. Bitcoin ended the week at approximately $57,300, marking a 10.8% decline from the previous week’s close of around $64,220. The price of Bitcoin fluctuated significantly, with notable drops on Tuesday and Sunday, leading to net outflows of approximately $277 million from Bitcoin spot ETFs.
Ethereum also had a tough week, closing at around $2,425, down 11.7% from the previous week’s close. Despite the price drop, Ethereum spot ETFs saw relatively moderate outflows of $12.6 million, with some new products even recording net inflows. Notably, Friday marked the first day since the conversion of ETHE with no outflows, suggesting that the trend of heavy outflows may be nearing its end. This development could pave the way for net inflows in the coming weeks, according to Matteo Greco, a research analyst at Fineqia International.
Greco noted that with summer coming to a close, there might be an uptick in trading activity and demand, potentially reversing the current trend of limited demand for ETH-based financial products, with only 7 out of 28 trading days recording positive inflows.
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