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Crypto is Flowing Out for Fourth Straight Week — Except One Coin

Published September 12, 2023 1:54 PM
Teuta Franjkovic
Published September 12, 2023 1:54 PM
Key Takeaways
  • Outflows from digital asset investment products stood at $59 million last week and now have reached 294 million.
  • Bitcoin suffered the most last week, losing US$69 million, while short-Bitcoin experienced its most significant week of inflows since March 2023, amounting to $15 million.

The week of September 3 through September 9 saw a total of $59.3 million in cryptocurrency asset outflows, pushing the current run to $249 million over four straight weeks.

Most of theactivity last week was in Bitcoin, which had $68.9 million in withdrawals offset by $15.2 million in inflows from Short Bitcoin and $0.7 million from XRP.

Insecurity in the regulatory and financial markets, according to CoinShares , is to blame for the streak:

“We believe continued worries over-regulation of the asset class and recent dollar strength are the most likely reasons for this. Timing wise, this is interesting as the [short bitcoin] inflows in March also came at a time of heightened regulatory uncertainty,” CoinShares research head James Butterfill said.

Trading volumes also dropped significantly, by 73% in comparison to the prior week, to just US$754 million for the week.

Solana as the ‘Most Beloved’ and Ether ‘Least Beloved’ Coin

Solana’s recent streak came to a stop the previous week as well. Solana saw $1.1 million in outflows after nine weeks of inflows totaling $14.1 million, which led CoinShares to claim that it was “the most beloved altcoin amongst investors.”

Ether also saw outflows for the week, with its $4.8 million coming in a distant second to Bitcoin. CoinShares  has dubbed it the “least loved digital asset among ETP [exchange-traded product] investors this year” due to its $108 million in year-to-date outflows.

flows by asset
Credit: Coinshares

Geographically, only $0.1 million from Brazil was the only country to record inflows. With relative outflows of $20 million, $17.6 million, and $12.3 million, Germany, Canada, and the United States took the lead in activity.

Significant withdrawals were made by Switzerland and Sweden as well; the former lost $7.4 million and the latter another $2.3 million.

A continuation of Bitcoin’s decline is foreseen by expert observers, with some anticipating that the currency would fall as low as $20,000. As the recent four-week run seems to imply, cryptocurrencies are unlikely to disrupt the balance of flows in any direction, this negative mood could contribute to future outflows.

According to John Stefanidis , CEO of blockchain infrastructure foundation Balthazar DAO, “the continued decline in altcoin values seems to be linked to the looming approval of FTX’s asset liquidation, a move that could impact the market values of many top cryptocurrencies, including XRP, which FTX holds a significant amount of.

The court is likely to approve FTX Crypto Exchange’s request to sell its estimated US$3.4 billion worth of crypto holdings on Wednesday. FTX Crypto Exchange declared bankruptcy in November 2022. The company offered to sell crypto assets worth up to $100 million per week, with a potential cap of $200 million.

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