Outflows of $6.5 Million Seen in Crypto Investment Products Last Week

8:01 pm
July 24, 2023

Last week, approximately $6.5 million was withdrawn from funds that track various cryptocurrencies. Bitcoin experienced outflows of $13 million, while Ethereum benefited from positive sentiment driven by XRP, resulting in inflows of $6.6 million. These outflows followed four consecutive weeks of inflows.

CoinShares, a digital asset investment products firm, released a report indicating minor outflows of $6.5 million in the crypto industry over the past week. This followed four weeks of consecutive inflows, during which investors invested $742 million in different crypto investment products. CoinShares Head of Research, James Butterfill, noted that although Bitcoin saw the highest outflows, the data indicated a positive shift in sentiment towards Ethereum investment products.

Ethereum and XRP Benefit from Inflows

The report highlighted that Bitcoin funds experienced $13 million of outflows, with short-bitcoin products seeing 13 consecutive weeks of outflows, totaling $5.5 million. On the other hand, Ethereum products recorded inflows of $6.6 million. According to Butterfill, this positive sentiment towards ETH coincided with the recent court ruling in the Ripple Labs versus US Securities and Exchange Commission (SEC) case.

The ruling by US Judge Analisa Torres favored Ripple, as she declared that XRP was not a security when sold on exchanges. As a result, the price of XRP surged more than 100%, reaching highs near the $1 mark. Although XRP failed to surpass the psychological $1 threshold, investor confidence in the cryptocurrency significantly increased. Butterfill stated, “XRP, both prior to, and following the conclusion of the recent SEC lawsuit, has seen inflows totaling US$6.8m over the last 11 weeks representing 8% of AuM. This implies investors are increasingly confident in the outlook for XRP.”

Other cryptocurrencies, such as Solana, Uniswap, and Polygon, also experienced inflows of $1.1 million, $0.7 million, and $0.7 million, respectively.

Frequently Asked Questions (FAQ)

What is a cryptocurrency investment product?

A cryptocurrency investment product is a type of financial instrument that allows individuals to invest in cryptocurrencies, such as Bitcoin or Ethereum, without owning the underlying assets. These products typically track the performance of specific cryptocurrencies or a basket of cryptocurrencies.

What are inflows and outflows in the context of crypto investment products?

Inflows and outflows refer to the movement of funds into and out of crypto investment products. Inflows occur when investors deposit money into these products, indicating a positive sentiment and a belief in the potential returns. Outflows, on the other hand, occur when investors withdraw money from these products, suggesting a negative sentiment or a desire to reallocate funds elsewhere.

Why did Ethereum experience inflows while Bitcoin saw outflows?

According to the CoinShares report, Ethereum benefited from positive sentiment driven by the recent court ruling in the Ripple Labs versus SEC case. The ruling favored Ripple and declared that XRP was not a security. This positive development likely increased confidence in Ethereum as well, leading to inflows into Ethereum investment products. Bitcoin, on the other hand, experienced outflows, indicating a temporary shift in investor sentiment towards other cryptocurrencies.

What is the significance of the XRP ruling in the Ripple Labs versus SEC case?

The ruling by US Judge Analisa Torres that XRP was not a security when sold on exchanges was seen as a major win for Ripple. It provided clarity and legitimacy to XRP as a cryptocurrency, leading to a surge in its price. The ruling also had a positive impact on investor sentiment, as reflected in the inflows into XRP investment products and the positive shift in sentiment towards other cryptocurrencies, such as Ethereum.

Summary

Last week, the crypto industry witnessed outflows of $6.5 million from investment products tracking various cryptocurrencies. Bitcoin experienced outflows of $13 million, while Ethereum saw inflows of $6.6 million, fueled by positive sentiment following the XRP-related court ruling. These outflows marked a departure from the four consecutive weeks of inflows that saw investors pour $742 million into different crypto investment products. The shifting sentiment and the impact of regulatory decisions continue to influence the movements of funds in the crypto market.


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