Despite the uptrend in bitcoin and other cryptocurrencies this year, investors are withdrawing from funds invested in digital assets at record levels.
Last week saw the fifth consecutive week of outflows from investment products that include digital assets, with $255 million in net outflows from such funds, according to analysis by the digital asset manager and trading group
It’s the largest single week of outflows on record and 1% of total assets under management.
These funds are typically exchange-traded products that offer investors the opportunity to gain exposure to digital assets such as cryptocurrencies
without actually holding crypto, like the Grayscale Bitcoin Trust, which trades on over-the-counter markets in the US.
The focus of the sale was heavily on Bitcoin, the largest digital asset, which saw $244 million in outflows. But it wasn’t just the bulls who retreated, the bears did too. There have been notable outflows from short bitcoin funds that have bet against prices.
Crypto-focused asset manager 21Shares also recently closed five exchange-traded crypto products and delisted another. The move is standard in the exchange-traded products industry, a company spokesman said, and was driven by an analysis of customer demand, with the funds in question accounting for less than 1% of the group’s total assets under management.
21Shares added that it continues to see inflows this year, posting the second-best January on company history and outperforming 2022, despite crypto prices being much lower across the board. But CoinShares data, which showed that more than $16.3 million flowed out of 21Shares funds in March, confirms that the recent trend is for assets to flee the crypto fund space.
What is notable about withdrawals from crypto funds is that they oppose price movements in the spot markets for bitcoin and other digital assets themselves.
Bitcoin has had its best four-day haul this week since February 2021 and is up nearly 60% steadily so far this year. It has been a similar story in the crypto landscape, where the total market cap of digital assets has grown from under $800 billion to over $1.1 trillion since early 2022.
Write to Jack Denton at firstname.lastname@example.org
Source : www.barrons.com