The latest report from CoinShares, a crypto asset manager, revealed that digital asset investment products underwent a significant change last week as $147 million in total outflows were recorded worldwide, ending a three-week streak of inflows.
CoinShares pointed out that this termination of inflows is not normal, as it is caused by a significant trend in the macroeconomic space.
Explaining Fund Flow: Who’s Earning and Who’s Not?
According to CoinShares, the sudden exit seen last week has impacted major asset managers, including BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares, following nearly $2 billion in inflows over the past three weeks.
Outflows were largely led by Bitcoin-based funds, accounting for $159 million in net outflows. In contrast, short Bitcoin investment products pulled in $2.8 million in revenue, indicating that some investors are betting on the asset’s downward price movement.
Ethereum-based products, on the other hand, which had just completed a five-week outflow last week, resumed their negative trend, recording a total outflow of $28.9 million.
James Butterfill, Head of Research at CoinShares, explained that this was due to investor interest in the “lack” of the asset. This shows that although Ethereum was briefly stable in the eyes of investors, confidence in its performance was not fully restored, leading to further outflows.
Meanwhile, multi-asset investment products, which provide diversified exposure across a range of cryptocurrencies, bucked the overall trend by attracting $29.4 million in revenue.
This marked the 16th consecutive week of positive inflows for these products, with $431 million entering the portfolio since June.
Butterfill noted that these products have gained popularity among investors who prefer a diversified approach, representing about 10% of assets under management (AUM) among global crypto fund managers.
In addition, in terms of region, the largest negative flows were concentrated in funds based in the US, Germany, and Hong Kong, which lost $209 million, $8.3 million, and $7.3 million, respectively.
However, this segment loss was offset by net inflows from products in Canada and Switzerland, which saw inflows of $43 million and $34.9 million.
The Real Reason for Exiting?
Notably, the change in market sentiment, which led to millions of exits, was linked to stronger-than-expected economic data. James Butterfill, explaining the market’s reaction to this unexpected economic data, wrote in the report:
Higher-than-expected economic data last week, reducing the possibility of a major rate cut is a possible reason for the weak sentiment among investors.
Butterfill added in line with these broader economic developments, noting:
Trading volumes increased slightly by 15% to US$10 per week in ETP investment products, while we saw lower prices in the broader crypto markets.
The featured image was created with DALL-E, a Chart from TradingView