Crypto & Blockchain News

Institutional Investors Continue To Draw Funds From Cryptocurrency Investments, While Altcoins Are Bucking Trends

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Institutional investors have consistently moved their funds away from cryptocurrency investment products over the past week, resulting in a cumulative outflow of $232 million. This marked the fifth straight week of outflows, indicating a 0.7% decline in total assets under management. The CoinShares Digital Asset Fund Flow report reveals that cryptocurrency investment product transactions totaled $900 million in the past week, a significant 40% decrease compared to the annual average. In addition, trading volume on the trusted exchange fell to a new low since late 2020, staying at just $20 billion for the week.

Bitcoin Continues to Suffer Outflows:

The leading cryptocurrency has been at the center of negative sentiment, experiencing an outflow of $33 million, consistent with the trend observed over the last five weeks. Surprisingly, even a short-bitcoin investment strategy, which benefited from falling bitcoin prices, saw a small outflow of $1.3 million. These two investment products have seen an outflow of $235 million over the last five weeks. Analysts speculate that ongoing regulatory issues, market volatility and broader macroeconomic factors may have contributed to the negative sentiment.

Altcoins Defy the Trend:

Interestingly, amidst the overall decline, altcoins—a cryptocurrency other than Bitcoin—have managed to buck the trend, with one notable exception. Ethereum, the second largest digital currency, reported a $1 million outflow. However, other altcoins such as Avalanche and Litecoin saw inflows of $700,000 and $300,000 respectively. This divergence indicates that investors are diversifying their portfolios and exploring alternative cryptocurrencies amid uncertain market conditions.

Blockchain ETF ETFs Experiencing Small Outflows:

The Blockchain equity ETF, which tracks baskets of shares of blockchain-based companies, witnessed the second straight week of minor outflows, shedding $2 million. While this trend is in line with overall cryptocurrency outflows, it signals a cautious approach from investors in the blockchain technology sector.

Tether Strategic Investment Decisions:

In a surprise move, Tether, the company behind the popular USDC stablecoin, announced a strategic decision to allocate up to 15% of its realized net operating profit to buy Bitcoin. This decision reflects Tether’s confidence in Bitcoin’s long-term potential and could have implications for the cryptocurrency market as a whole.

The persistent withdrawal of funds from institutional investors from cryptocurrency investments, decreased trading volumes, and regulatory issues have contributed to a challenging market environment. However, while Bitcoin faces continued outflows, altcoins such as Avalanche and Litecoin are attracting investment. As the market develops, it will be interesting to observe the impact of Tether’s strategic investment decisions on Bitcoin and the wider cryptocurrency landscape.

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