Investors in general have slowed down the withdrawal of capital from cryptocurrency funds over the past week, however, outflows are now observed not only in products based on Bitcoin, but also based on altcoins, CoinShares said in a new report. While the net outflow from Bitcoin funds decreased, some investors became disillusioned with Ethereum.
How is investor sentiment about Ethereum changing?
In total, crypto funds lost $ 21 million in seven days, while a week earlier the outflow was $ 94 million. According to analysts, this change may serve as an early sign of passing the peak of bearish expectations of investors. For several weeks, they have been withdrawing capital from Bitcoin funds along with a decline in the market.
However, capital outflows from crypto-focused products have now slowed down. Experts do not exclude that we are seeing a gradual trend change. The first positive signals recorded in the first half of June. Institutions have increased their investment in products related to altcoins such as Ethereum (ETH), XRP, and Cardano (ADA). Ethereum and XRP-based funds, on the contrary, recorded inflows of funds as cryptocurrency portfolios diversified. The inflow of funds into Ethereum funds amounted to $ 27 million. For the first time, trading volumes in such products surpassed the indicators of Bitcoin – $ 4.1 billion against $ 3.1 billion.
However, last week, unexpectedly large players withdrew $ 12.7 million from Ethereum funds – this is the largest capital outflow since 2015, that is, in the entire history of this cryptocurrency, the researchers note. XRP funds lost $ 2.8 million after raising $ 21 million in six weeks.
Analysts believe that this trend reflects the mixed mood in the camp of institutionalists, which are still only being determined with the further strategy of behavior in the market.
In general, market sentiment is gradually improving
Since the beginning of the year, the inflow of funds into such funds amounted to $ 994 million. And the total amount of capital in them reached $ 11.1 billion. This month, they consistently outperformed Bitcoin funds.
Outflows from Bitcoin at the same time amounted to only $ 10 million. Last week, the figure reached a record $ 141 million. Thus, trading activity in Bitcoin funds increased by 43%.
In general, the observed dynamics speaks of a lack of consensus among investors regarding the future direction of the market after rising bearish expectations over the past month, analysts add.
«Although sentiment has dropped over the past month, investors generally remain committed to cryptocurrencies given the inflows that have been recorded this year”, writes CoinShares, noting that since the beginning of 2021, crypto funds have raised $ 5.8 billion. In comparison, the total figure for 2020 year amounted to $ 6.7 billion.
Crypto holdings among institutional managers hit record highs in the midst of a bull market earlier this year. Naturally, many investors profit from the last spike in market volatility.
However, the weekly cash flow report suggests that market sentiment is gradually improving. In addition, cryptocurrency prices are gradually recovering.