Crypto funds snap 17-week of inflows, post largest outflows on record

The largest previous departure on record was in early June 2021, where weekly departures totaled $ 97 million.

The sell off of investment products in digital assets or crypto funds, which are generally preferred by institutional investors, came amid a widespread correction in the crypto market.

Amid risk sentiment in global financial markets due to rising inflation and rising new cases of covid around the world, bitcoin has plunged from a high of around $ 69,000 to less than $ 46,000 over the last month or so.

During December 11-17, the price of the world's largest crypto asset, bitcoin, plummeted by around 6%. In particular, bitcoin-based funds posted outflows totaling $ 89 million during this period, but were well below the outflows seen in June, where they reached $ 150 million.

While this exit seems alarming, according to the digital asset manager, there are several points to consider.

“First of all, it comes at a time when there have been considerable outflows of all risky assets following the recent statement by the US Federal Reserve on phasing out. Second, exits represent only 0.23% of total assets under management (AUM) and, from a historical perspective, they are small relative to exits in early 2018, where weekly departures accounted for up to 1, 6% of assets under management, "CoinShares said in a report.

Additionally, the exits came at a time when record annual inflows peaked at $ 9.5 billion, relative to inflows that totaled $ 6.7 billion in 2020.

However, the overall sell-off was softened by buying altcoins, a cumulative term to define cryptocurrencies that came after bitcoin, such as Solana, Polkadot, and multi-asset investment products, which recorded net purchases totaling $ 6.7 million, $ 2.5 million and $ 1.5 million, respectively. .

However, the largest altcoin, Ethereum, posted record outflows totaling $ 64 million for the week ending December 17.

In terms of crypto fund providers, the world's largest digital asset manager, Grayscale, was stable with a total assets under management (AUM) of $ 43.68 billion, followed by CoinShares at $ 4.99 billion and 3iQ with an AUM of $ 2.60 billion.

The total AUM from crypto funders was $ 63.02 billion for the week.