A recent report revealed that cryptocurrency-based investment products saw significant outflows last week. The negative flows, led by the largest cryptocurrency by market cap, surpassed $300 million on August 31, suggesting broader negative sentiment among investors across various regions.
US leads crypto ETPs with $305 million in outflows
The latest report from European digital asset manager CoinShares showed that crypto investment products suffered $305 million in outflows last week. According to data from different providers and regions, these outflows point to a general negative sentiment, apparently triggered by stronger macroeconomic data in the United States.
The negative sentiment appears to be fueled by “stronger-than-expected US economic data,” which has reduced expectations of a 50 basis point interest rate cut this month.
Last week flows by country: Source: CoinShares
The United States led the regional net negative flows with $318 million in outflows from August 26 to 31. In addition, the country recorded the highest month-to-date (MTD) outflows, recording $65 million in negative flows.
In comparison, Germany and Sweden recorded capital outflows of $7.3 million and $4.3 million last week. These countries also rank second and third in terms of negative flows in MTD, with capital outflows of $13.4 million and $1.3 million, respectively.
Canada, meanwhile, was the country that recorded the positive net flows with inflows totaling $13.2 million, although it is the country that has recorded the largest outflows since the beginning of the year. The digital asset manager expects crypto assets and market sentiment to continue to be very sensitive to interest rate expectations:
We continue to expect the asset class to become increasingly sensitive to interest rate expectations as the Fed moves closer to a pivot.
Negative sentiment focuses on Bitcoin
According to the report, Bitcoin, the flagship cryptocurrency, led the negative sentiment with $319 million in outflows, followed by Ethereum with $5.7 million. The slowdown was concentrated in Bitcoin ETFs (exchange-traded funds), which saw most of the losses by investment product.
Last week flows by asset. Source: CoinShares
The ARK 21Shared Bitcoin ETF (ARKB) was the exchange-traded product (ETP) with the largest negative flow, with $220.95 million in outflows. Grayscale Bitcoin Trust (GBTC) and ProShares Bitcoin Strategy ETF (BITO) recorded $119.19 million and $78.28 million, respectively.
Nevertheless, the iShares Bitcoin Trust ETF (IBIT) topped the inflows list with a remarkable positive net flow of $210.55 million. Similarly, Short BTC investment products recorded a second consecutive week of inflows with $4.4 million, the largest since March 2024.
Ethereum trading volumes stagnated last week. According to the report, ETH-based products saw volume levels comparable to those before the launch of ETH spot ETFs. Moreover, these levels represented only 15% of the volume recorded the week of the US ETF launch.
Ethereum ETFs showed no activity on Friday, according to data from Farside Investors. ETH investment products saw no inflows or outflows across all issuers on August 30, a level not seen since the launch of U.S. spot cryptocurrency ETFs in January.
It is worth noting that ETH ETFs saw minimal activity throughout the week, with most issuers seeing no volume and Grayscale Ethereum Trust (ETHE) posting negative numbers. Conversely, Solana-based products saw $7.6 million in inflows last week.
Total crypto market capitalization is at $2.01 trillion in the weekly chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com
