Digital asset investment products have seen a second consecutive week of capital outflows, but Solana appears to be bucking the trend. Notably, last week was packed with capital outflows from cryptocurrency-based investment products, totaling a substantial $726 million.
The outflows were largely concentrated in two of the largest and most prominent cryptocurrencies, bitcoin-price-crashed-below-54000/” rel=”nofollow noopener” target=”_blank”>bitcoin and eth/ethereum-price-recovers-2320/” rel=”nofollow noopener” target=”_blank”>ethereumwhich corresponded with a lack of bullish momentum in its spot prices. In contrast, Solana-based investment products have continued to defy the overall market trend.
Solana remains the favorite of institutional investors
Solana has attracted entries for the second consecutive weekindicating growing investor confidence in the asset. According to CoinShares latest weekly report As for digital asset investment funds, Solana-based investment products saw a total inflow of $6.2 million last week, bringing their year-to-date inflows to $47 million.
While these entry numbers may be minuscule or small compared to what we have seen with digital asset investment products, timing has made it possible. A little more important. This is because the entire cryptocurrency industry has been plagued by bearish sentiment in recent weeks, which has been reflected in institutional investors, so much so that outflows from digital asset products have matched the largest outflow recorded in March of this year.
As CoinShares noted, much of this negative sentiment has been driven by investor expectations surrounding the US Federal Reserve’s monetary policy. Many market participants are anticipating a 25 basis point (bp) interest rate cut following stronger-than-expected macroeconomic data in the previous week. As a result, a significant portion of the outflows came from the US, which saw a staggering $721 million withdrawn from digital asset investment products. Canada followed closely behind, experiencing outflows of $28 million.
As expected, bitcoin had the most outflows as a spot bitcoin ETF recorded departures every day last week. As such, bitcoin investment products totaled $643 million in outflows. ethereum was similarly affected. Notably, recently launched ethereum Spot ETFs, especially Grayscale Trust, contributed significantly to the overall outflows. ethereum investment products saw a total of $98 million in outflows as investor interest in the asset waned alongside broader market concerns.
In contrast, some other digital assets managed to buck the trend and attracted modest capital inflows. Multi-asset products saw capital inflows of $3.4 million, while XRP and Litecoin saw inflows of $1 million and $0.7 million, respectively. Additionally, short bitcoin products (which profit from falling prices) saw capital inflows of $3.9 million, further accentuating the bearish sentiment around bitcoin.
Interestingly, investment products in Europe managed to end the week with positive inflows. Germany and Switzerland stood out in particular, recording inflows of $16.3 million and $3.2 million, respectively. Other regions, including Australia and Brazil, also saw inflows, with $0.9 million and $3.9 million flowing into their respective digital asset markets.
Featured image created with Dall.E, chart from Tradingview.com
