Investor Caution Persists as Digital Asset Investment Products See $126M in Outflows

Digital asset investment products witnessed minor outflows amounting to $126 million in the past week as investors displayed hesitancy amidst a stalled positive price momentum. 

While trading volumes did experience a slight increase from $17 billion to $21 billion on a week-on-week basis, activity in exchange-traded products (ETPs) and exchange-traded funds (ETFs) dropped relative to the overall market, according to a CoinShares report. 

ETP/ETF activity accounted for 40% of total volumes on trusted exchanges over the past month but decreased to 31% last week, indicating the cautious approach adopted by investors.

Bitcoin Sees $110M in Outflows

The report added that Bitcoin experienced outflows of $110 million but maintained positive inflows of $555 million month-to-date. 

Short-bitcoin, which had been witnessing outflows for the past three weeks, saw minor inflows of $1.7 million, likely capitalizing on the recent price weakness.

CoinShares: Digital asset investment products saw minor outflows totalling US$126m last week. Investors are seemingly hesitant since the positive price momentum has stalled. Ethereum suffered on a relative basis the most, with US$29m outflows last week, marking its 5th…

— Wu Blockchain (@WuBlockchain) April 15, 2024

On a relative basis, Ethereum suffered the most, with outflows of $29 million last week, marking its fifth consecutive week of outflows. 

However, altcoins had a successful week, with several lesser-known names attracting inflows. 

Decentraland, Basic Attention Token, and LIDO saw inflows of $4.9 million, $2.9 million, and $1.8 million, respectively.

Regionally, sentiment remains polarized.

The United States recorded the largest outflows, totaling $145 million, followed by Switzerland and Canada with outflows of $5.7 million and $6 million, respectively. 

Conversely, investors in Germany viewed recent price weakness as an opportunity and injected $29 million in inflows last week.

The cautious sentiment among investors reflects their wariness of the current market conditions and the uncertain trajectory of digital assets. 

Last week, investors poured a total of $646 million into crypto products, pushing the year-to-date inflows to an unprecedented $13.8 billion and surpassing the previous year’s total of $10.6 billion. 

Bitcoin was the primary focus for investors, with inflows totaling $663 million. 

Bitcoin Surges as Hong Kong Approves Spot ETFs

Bitcoin experienced a 2.8% surge over a 24-hour period, reaching a trading value above $66,500, while ether (ETH) advanced to $3,240 after multiple issuers in Hong Kong announced that they received approval for spot crypto ETFs.

China Asset Management, Bosera Capital, and other applicants took to the social media platform WeChat (Weixin) to share the news of their approval to list spot Bitcoin and Ether ETFs in Hong Kong. 

The news is significant as analysts predict mainland Chinese investors could pour $25 billion in potential Hong Kong-listed spot Bitcoin ETFs through the Southbound Stock Connect program.

The Southbound Stock Connect allows qualified mainland Chinese investors to access eligible shares listed in Hong Kong.

Meanwhile, a notable outflow of Bitcoin from miners could be on the horizon in the months following the upcoming halving event.

In a recent note, Markus Thielen, the head of research at 10x Research, estimated that Bitcoin miners have the potential to liquidate approximately $5 billion worth of BTC after the halving.

Thielen also highlighted that this selling pressure from miners could persist for four to six months, leading to a potential sideways movement in Bitcoin’s price during that period, similar to what has been observed in past halving cycles.

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