According to a recent report from CoinShares, outflows from crypto exchange-traded products (ETPs) have reached a total of $455 million over the past nine weeks. This trend of outflows generally indicates a negative sentiment towards cryptocurrencies.
Crypto exchange-traded products are specifically designed to track crypto prices. When the shares of these funds fall below their target prices, cryptocurrencies are sold off, resulting in outflows. The week leading up to September 18 witnessed outflows of $54 million, marking the ninth consecutive week with outflows and only a single week with inflows during this period.
Bitcoin (BTC) experienced the largest drawdown from all exchange-traded products, accounting for 85% of the total outflows from these funds. Last week alone, ETPs sold over $45 million worth of Bitcoin into the market.
Ether (ETH) funds also faced the effects of this selling spree, with outflows of approximately $5 million recorded last week.
Despite these widespread outflows, a few ETPs representing altcoins managed to perform well. Solana (SOL) ETPs experienced net inflows of $700,000, Cardano (ADA) gained $430,000, and XRP (XRP) added $130,000.
CoinShares further provided insights into the regional origin of crypto ETP outflows. The United States was responsible for 77% of the outflows, with Germany, Canada, and Sweden also contributing significantly.
Crypto ETPs offer a more accessible way for investors with traditional financial accounts to invest in digital assets. However, the issuance of a spot Bitcoin exchange-traded fund has faced various regulatory and legal barriers in the United States. The Securities and Exchange Commission (SEC) denied VanEck’s proposal for a Bitcoin Trust in March. Recently, on August 11, a U.S. federal appeals court ruled that the SEC had acted “arbitrary and capricious” in denying a Bitcoin ETP proposal from Grayscale.
In conclusion, the recent trend of outflows from crypto exchange-traded products reflects a negative sentiment towards cryptocurrencies. Bitcoin has been particularly affected, with significant selling from ETPs. However, a few altcoin ETPs managed to buck the trend and attract inflows. The dominance of outflows from the United States highlights some regulatory challenges faced by the crypto market, particularly the issuance of a spot Bitcoin exchange-traded fund.
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