Weekly cryptocurrency asset flows for the week ending Aug. 4 amounted to $107 million in outflows, continuing a three-week trend of negative flows totaling $134.8 million. The majority of movement in this period was attributed to Bitcoin (BTC), which saw $111 million in outflows, negating most of the inflows for the week.
According to CoinShares’ “Digital Asset Fund Flows” weekly report, this indicates further “profit taking” as investors capitalize on the gains from the previous cycle. In the month leading up to the recent outflows, there were inflows of $742 million into crypto funds, with 99% of that going into Bitcoin.
Weekly trading volumes in investment products saw a dip below the year-to-date average, with on-exchange market volumes down 62% against the relative average. Regionally, only Australia and the United States experienced inflows of $0.3 million and $0.2 million, respectively. On the other hand, Canada saw the largest outflows of $70.8 million, followed by Germany with $28.5 million.
Despite the outflows from Bitcoin, the weekly total was somewhat boosted by inflows into Solana (SOL) with $9.5 million, compared to last week’s inflows of $0.6 million. XRP investment products also saw inflows of $0.5 million.
Ether (ETH) funds continue to experience a negative trend, adding $5.9 million in outflows to the previous week’s $1.9 million. This offsets the prior inflows of $6.6 million and further differentiates it from Solana’s current bullish trend.
While Bitcoin remains positive for the year compared to its opening in January, some experts attribute its mostly sideways movement below $30,000 since April to market uncertainty. Bitcoin “hodlers” have outperformed crypto funds by 69% in the first half of 2023, according to data from Switzerland-based investment adviser 21e6 Capital AG. The implosion of FTX in 2022, along with regulatory and legal uncertainty for other exchanges, may have prompted crypto fund investors to hold more cash rather than invest, contributing to the current decline.
The report from 21e6 Capital AG also indicates a slightly more positive investor sentiment compared to the first half of 2023.
Overall, the outflows in cryptocurrency assets reflect a cautious approach by investors, possibly driven by profit-taking, market uncertainty, and regulatory concerns. While Bitcoin remains the dominant cryptocurrency, alternative assets like Solana and XRP are attracting some inflows, highlighting the diversification within the crypto market. The future trajectory of cryptocurrency asset flows will likely depend on factors such as market conditions, regulatory developments, and investor sentiment.