Digital Assets See Outflows of $62M Last Week

Takeaways

• Digital asset investment products saw outflows totalling US$62m, marking the 7th consecutive week of outflows that now totals US$329m.
• Tron, the smart contracting platform, was the primary focus, seeing outflows totalling US$51m last week.
• We believe investors have been taking profits and exiting short positions rather than the recent outflows representing a structural downshift in sentiment for bitcoin.

Digital asset investment products saw outflows totalling US$62m, marking the 7th consecutive week of outflows that now totals US$329m, representing 1% of total assets under management (AuM). From a proportional perspective this now matches the run of outflows seen at the beginning of 2022. The change in total AuM over this period matches the outflow of 1% implying this was not driven by price declines but profit taking, particularly in light of prices having risen 56% across investment products year-to-date.

The recent outflows are off the back of low trading activity, with volumes remaining 60% below the year’s average. This is mirrored in the broader crypto market which has seen a 55% decline in volumes over the last 7 weeks.

Tron, the smart contracting platform, was the primary focus, seeing outflows totalling US$51m last week, representing 70% of total AuM. We believe this was a single investment product provider removing seed capital rather than anything more ominous.

Bitcoin saw minor outflows totalling US$2.7m while short-bitcoin also saw outflows of US$6.3m. While the absolute outflows for short-bitcoin are smaller, the total outflow over the last 6 weeks represent 44% of total AuM, compared to just 0.9% for long-bitcoin. This implies investors have been taking profits and exiting short positions rather than implying a structural downshift in sentiment for the asset.

Contact James Butterfill at [email protected]