Despite a continuous outflow of crypto investment products for the past six weeks, some altcoins like XRP and Solana are showing resilience and attracting inflows, defying the broader market sentiment.
Analyzing the Trend of Crypto Outflows
According to CoinShares’ latest digital asset fund flow weekly report, crypto funds experienced a net outflow of $9 million in the past week, bringing the total to around $464 million over the last ten weeks.
Notable players in digital asset management such as CoinShares, Grayscale, 21Shares, Bitwise, and ProShares have been affected by this ongoing trend.
Although the outflows have decreased from the previous week’s $54 million, they continue the ten-week streak of capital moving away from these products.
The report also reveals that this trend is not uniform across regions. Europe has managed to resist the outflows, recording inflows of $16 million. The Research Head at CoinShares, James Butterfill, attributes this regional divergence to varying reactions to the regulatory environment.
Butterfill explains that European investors see the “recent regulatory disappointment as an opportunity,” whereas their counterparts in the US have withdrawn $14 million, possibly due to concern over recent events.
Furthermore, trading volumes in crypto funds reflect the cautious sentiment, with volume dropping to $820 million from over $1 billion the previous week, well below the yearly average of $1.3 billion.
Not All Assets Are Affected
Bitcoin, the leading cryptocurrency, has also experienced outflows for three consecutive weeks, with a decrease of $6 million in the past week alone. Interestingly, Short-Bitcoin products, which benefit from falling Bitcoin prices, have seen outflows of $2.8 million.
This suggests that investors may be unwinding their bearish bets on Bitcoin. Butterfill states that this outflow represents a 78% decrease in assets under management in these products over the past 22 weeks.
Ethereum, another prominent cryptocurrency, has experienced outflows for six consecutive weeks, resulting in a recent reduction of $2.2 million.
In contrast to these major players, XRP and Solana have emerged as bright spots in the market. This week, they attracted inflows of $660,000 and $310,000, respectively. Interestingly, this is not the first time these altcoins have performed well during a downturn.
Last week, both assets saw significant inflows. Solana led the way with $700,000, followed by Cardano and XRP, which attracted inflows of $400,000 and $100,000, respectively.
While Cardano did not experience notable inflows this week, the positive inflows of XRP and Solana amid the broader negativity suggest that some investors are taking a selective and value-driven approach in the altcoin market, according to the report.
Despite the recent capital influx, both XRP and Solana continue to be affected by the overall downturn in the global crypto market.
Currently, XRP is down by 1.5% in the past day, with a current price of $0.50. Solana, on the other hand, has seen a slight 0.5% upward movement over the same period, with a trading price of $19.60 at the time of writing.
Featured image from iStock, Chart from TradingView
Despite a continuous outflow of around $464 million in crypto investment products over the past ten weeks, altcoins XRP and Solana have managed to buck the trend and attract inflows. This comes as Bitcoin and Ethereum, the two dominant cryptocurrencies, continue to experience outflows. The outflow trend in crypto funds has been accompanied by a drop in trading volumes in recent weeks, indicating a cautious sentiment among investors. However, European investors have shown more resiliency, with inflows in crypto funds, in contrast to their US counterparts who have withdrawn capital due to recent events. While XRP and Solana’s recent inflows are positive, both assets continue to be impacted by the overall downturn in the crypto market.
1. What are crypto outflows?
Crypto outflows refer to the movement of capital away from crypto investment products such as crypto funds.
2. Why are XRP and Solana attracting inflows?
XRP and Solana are defying the broader market sentiment by attracting inflows during a period of outflows. This suggests that some investors see value in these altcoins and are taking a selective approach in the altcoin market.
3. Why are European investors more resilient to the outflow trend?
European investors have shown resiliency and recorded inflows in crypto funds due to their perception of recent regulatory developments as an opportunity. On the other hand, US investors have withdrawn capital possibly due to concerns over recent events.