Crypto investment products witness a record $207M in outflows

• A recent report has revealed that crypto investment products last week suffered an unprecedented loss of $207M in outflows.
• This is the fourth consecutive week of outflows, which began mid-December and halted a 17-week streak of inflows.

In the last week, almost all crypto investment products saw outflows amount to a record of $207 million.

Specifically, crypto investment products tracking Bitcoin (BTC) saw the highest number of outflows, at $107 million. The latest CoinShares report attributes this to a “direct response to the FOMC minutes which revealed the US Federal Reserve’s concerns for rising inflation, and the fear amongst investors of an interest rate hike.” The last month, the report notes have also seen 25 percent Bitcoin trading turnover, an indication of greater institutional investor activity than is typical.

A shift in crypto investment products fund flows

Other crypto investment products that saw outflows last week include those of Ethereum, which witnessed a $39 million drain. This leads to a total five-week outflow of $200 million. This exceeds the proportion of Bitcoin outflows, which represent 1.4 percent of all AUM. Multi-asset funds had $37 million in outflows, suggesting less investor interest in selling. Blockchain equities investment products also saw $10 million in outflows over the week.

Crypto investment products tracking XRP, Solana, and Litecoin saw minor inflows of $0.8M, $0.5M, and $0.3M. Polkadot-based investment products balanced sales and purchases to a net effect of zero.

Last week marks the highest in outflows since a trend that began in mid-December. The 4-week outflows now total $456 million, or 0.8 percent of the total assets under management (AUM), or about twice the combined total outflows of the preceding three weeks. Even more, the drain of funds halts $3.6 billion in inflows that were recorded starting August 2021. These inflows had run persistently for 17 weeks.

The bigger picture

For the greater part of last year, crypto investment products saw noteworthy gains. The whole year had 9.3 billion in crypto inflows from institutional investors, a 36 percent improvement from $6.8 billion in 2020. 

Read More: 2021 saw $9.3B in crypto inflows by institutional investors, compared to $6.8B in 2020: CoinShares

However, that year concluded with three consecutive weeks of outflows. The last week of 2021 saw dwindling outflows of $32 million, compared to $86 million of the week before and $142 million of the week before that. These three-week outflows totaled $260 million, or 0.4 percent of AUM.

Additionally, these outflows coincide with the wider market correction, where the lead digital asset BTC is trading sideways at around $42,000. The drop is attributed in part to the recent civil unrest in Kazakhstan following increased fuel prices. Some crypto analysts predicted such a drop, and possibly worse, to happen this year. However, others expressed positivism that despite a nosedive, the crypto market would recuperate with BTC topping $100K within the year.