Crypto outflows dawdle: Negative sentiments to exit the market?

Posted: September 5, 2023

• As negative sentiment began to dwindle, crypto outflows dropped to their lowest in weeks. 
• With a year-to-date net inflow of $26 million, Solana might be “the most loved altcoin.” 

Capital flight from digital asset investment products “cooled off” last week, causing outflows to drop to a low of $11.2 million, digital asset investment firm CoinShares found in a new report.

Source: CoinShares

Last week’s $11.2 million liquidity exit from crypto funds represented a 93% decrease from the $168 million in outflows recorded the previous week. According to CoinShares, that week’s outflows were the largest since the US regulatory crackdown on exchanges in March 2023.

CoinShares opined that last week’s decline in activity might be due to negative sentiment taking a “turn.” However, despite the low activity, trading volume rallied above the year-to-date (YTD) average by 90%. During the period under review, trading volume totaled $2.8 billion. 

The digital asset investment firm added,

“Year-to-date digital asset investment products remain in a net inflow position totalling US$165m, with the year so far beset with large gyrations of investor flows, very much driven by the hopes and concerns for regulation on digital assets.” 

For the first time in several weeks, Bitcoin was not the primary victim

The past few weeks have been marked by significant Bitcoin [BTC] sell-offs. For context, in the previous week, BTC investment products accounted for most of last week’s outflows at $149 million. This represented 87% of all funds removed from the market during that period.

With the gradual re-emergence of positive sentiment, the king coin recorded minor inflows of $3.8 million last week. The report stated that the coin remained in a YTD net inflow of $269 million.

Continuing its trend of outflows, Short-Bitcoin products suffered a liquidity exit of $3.3 million last week. This was its 19th week of consecutive funds outflow, “with total assets under management (AuM) having fallen 48% from this year’s peak,” CoinShares said.

Solana is king

According to the report, Solana’s [SOL] inflows in the past nine weeks totaled $700,000. This brought the Layer 1 (L1) coin’s YTD inflows to $26 million, suggesting that “it is the most loved altcoin amongst investors at present.”

On the other hand, leading coin Ethereum [ETH], suffered the outflows. It saw the removal of capital worth $3.2 million from crypto funds. At the same time, Polygon [MATIC] saw the highest amount of outflows last week, totaling $9 million.