Crypto fund outflows hit peak

The largest previous weekly outflow on record was $97 million in early June 2021.

The sell-off in digital asset investment products, or crypto funds, which are generally preferred by institutional investors, came amid widespread correction in the crypto market.

Amid risk-off sentiment in the global financial markets because of rising inflation and a surge in covid cases across the world, the world’s biggest crypto asset, bitcoin, has slumped from a high of around $69,000 to less than $46,000 over the last month.

During 11-17 December, the price of bitcoin, slumped by around 6%.

Bitcoin-based funds saw outflows of $89 million during this period but was well below the outflows seen in June where they were as much as $150 million.

This outflow appears alarming, but there are several points to consider according to the digital asset manager.

“First, it comes at a time when there have been considerable outflows across all risk assets following the recent US Federal Reserve statement on tapering. Second, outflows represent only 0.23% of total assets under management (AUM) and from an historical perspective are small relative to the outflows in early 2018 where weekly outflows represented up to 1.6% of AUM,” CoinShares said in a report.

The outflows have come at a time of record yearly inflows of $9.5 billion, compared with inflows of $6.7 billion in 2020.

However, the sell-off was softened by buying in altcoins.