Crypto Products See $305M Outflows Amid Negative Sentiment

A recent report revealed that crypto-based investment products saw significant outflows last week. The negative flows, led by the largest cryptocurrency by market capitalization, surpassed $300 million on August 31, suggesting a broader adverse sentiment among investors in various regions.

The US Leads Crypto ETPs $305M Outflows

European digital asset manager CoinShares’ most recent report showed that crypto investment products were hit with $305 million in outflows in the past week. According to data from different providers and regions, the outflows hinted at a widespread negative sentiment, seemingly prompted by stronger macro data in the US.

The adverse sentiment appears to be driven by “stronger-than-expected economic data in the US,” which reduced the expectation of a 50-basis point interest rate cut this month.

Last week flows by country: Source: CoinShares

The US led the negative net flows regionally with $318 million outflows from August 26 to August 31. Additionally, the country has seen the highest outflows Month-to-Date (MTD), registering $65 million in negative flows.

Comparatively, Germany and Sweden saw $7.3 million and $4.3 million in outflows last week. These countries also ranked second and third in MTD negative flows, with $13.4 and $1.3 million in outflows, respectively.

Meanwhile, Canada led the positive net flows with inflows totaling $13.2 million despite being the country with the largest outflows Year-to-Date (YTD). The digital asset manager expects crypto assets and the market sentiment to continue being highly sensitive to the interest rate expectations:

 We continue to expect the asset class to become increasingly sensitive to interest rate expectations as the FED gets closer to a pivot.

Negative Sentiment Focuses On Bitcoin

Per the report, Bitcoin, the flagship cryptocurrency, led the negative sentiment with $319 million in outflows, followed by Ethereum’s $5.7 million. The downturn was focused on Bitcoin ETFs (exchange-traded funds), which registered most of the losses by investment products.

Last week flows by asset. Source: CoinShares

ARK 21Shared Bitcoin ETF (ARKB) was the exchange-traded product (ETP) with the largest negative flow, seeing $220.95 million in outflows. Grayscale Bitcoin Trust (GBTC) and ProShares Bitcoin Strategy ETF (BITO) saw $119.19 million and $78.28 million respectively.

Nonetheless, iShares Bitcoin Trust ETF (IBIT) topped the inflows list with a remarkable $210.55 million positive net flow. Similarly, Short BTC investment products registered a second consecutive week of inflows with $4.4 million, the largest since March 2024.

Ethereum’s trading volumes were stagnated in the past week. Per the report, ETH-based products saw volume levels comparable to those before the spot ETH ETFs launched. Moreover, these levels only accounted for 15% of the volume registered on US ETFs launch week.

According to Farside Investors’ data, Ethereum ETFs showed no activity on Friday. The ETH investment products saw no inflows or outflows across all issuers on August 30, which has not been seen since the launch of US spot crypto-based ETFs in January.

It’s worth noting that, throughout the week, ETH ETFs registered minimum activity, with most issuers seeing no volume and Grayscale Ethereum Trust (ETHE) showing negative numbers. Conversely, Solana-based products saw $7.6m 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