Digital Asset Investment Products Face Significant Outflows Amid Investor Pessimism

Key Points:

• Digital asset investment products experienced significant outflows of $584 million last week, driven by investor pessimism about potential Federal Reserve interest rate cuts.
• The U.S. led the outflows with $475 million, while Switzerland and Brazil saw inflows of $39 million and $48.5 million, respectively.
• Bitcoin and Ethereum saw major outflows, but some altcoins like Solana, Litecoin, and Polygon recorded inflows, indicating selective investor optimism in specific assets.

According to CoinShares, digital asset investment products experienced significant outflows last week, a week that showed a “true correction” of the crypto market.

Digital Asset Investment Products See Major Outflows Amid Investor Concerns

Digital asset investment products saw outflows totaling $584 million, marking the second consecutive week of declines and bringing the total outflows to $1.2 billion.

Analysts attribute this trend to investor pessimism regarding potential interest rate cuts by the Federal Reserve this year. The market also saw the lowest trading volumes on exchange-traded products (ETPs) globally since the launch of U.S. ETFs in January, with a total volume of just $6.9 billion for the week.

The United States led the outflows, with $475 million exiting the market, followed by Canada with $109 million in outflows. Other regions also experienced notable withdrawals, including Germany ($24 million) and Hong Kong ($19 million). In contrast, Switzerland and Brazil diverged from this trend, recording inflows of $39 million and $48.5 million, respectively.

Bitcoin and Ethereum Hit Hard, Altcoins Show Selective Inflows

Bitcoin was the hardest hit, experiencing outflows of $630 million. Despite the negative sentiment, there was no significant increase in short positions, with short Bitcoin products seeing a modest outflow of $1.2 million. Ethereum also suffered, with outflows amounting to $58 million.

Some altcoins, however, saw inflows amid the broader market downturn. Solana, Litecoin, and Polygon recorded inflows of $2.7 million, $1.3 million, and $1 million, respectively, which means that investors are finding value in these assets despite overall market weakness. Additionally, multi-asset products attracted $98 million in inflows, indicating that some investors view the current market conditions as a buying opportunity for a diverse portfolio of altcoins.