Kryptofond records a record exit of $ 423 million when Bitcoin plunges the market

by Arthur · July 13, 2022

Table of Contents

Top line

Investors stacked out of cryptocurrency funds at record speeds last week after bitcoin fell to its lowest level in 18 months, cryptocurrency firm CoinShares reported on Monday, highlighting bearishness that has peaked this month as markets struggle with Federal Reserve reversal. of stimulus measures from the pandemic.

“Highly polarized sentiment” causes investors to avoid bitcoin funds for the benefit of others … [+] cryptocurrencies – and flows to the first US fund designed to short bitcoin.

Getty pictures

Keywords

Cryptocurrency funds had a net outflow of $ 423 million last week, surpassing the previous record of $ 198 million set when crypto markets fell in January, bringing total assets down to $ 36.2 billion, according to a Monday report from CoinShares.

Cash transferred from bitcoin funds drove record activity, with net outflows of $ 453 million – virtually wiped out all inflows this year and pushed assets in such funds down to $ 24.5 billion, the lowest level since the beginning of last year, CoinShares reported.

CoinShares’ James Butterfill notes that the sale took place on June 17 (but was reflected in last week’s figures due to trade reporting delays) and was probably responsible for bitcoin’s steep fall that weekend, when prices fell below $ 18,000 as the crypto market struggled. of job cuts, rumors of impending bankruptcy of large companies and a sharp rise in interest rates from the US Federal Reserve.

Meanwhile, funds that shorted bitcoin saw an inflow of a total of $ 15 million in the same week thanks to the launch of ProShares’ Short Bitcoin ETF, which debuted on Tuesday and marks the first US fund designed to short the world’s largest cryptocurrency.

Outside bitcoin, funds invested in other cryptocurrencies saw widespread inflows last week – highlighting the “highly polarized sentiment” among cryptocurrency investors, Butterfill said, with Ethereum funds picking up $ 11 million and breaking an 11-week range, for example. outflows.

As a percentage of total assets under management, last week’s outflow is the third largest recorded with 1.2% – which is lower than a decline of 1.6% during the bear market in February 2018.

Key background

Historically low interest rates and government stimulus measures led to sky-high cryptocurrency prices during the pandemic, but Fed rate hikes to curb rising inflation have since hit general market sentiment. To highlight industry problems, the popular brokerage house Coinbase laid off around 18% of its employees earlier this month, while the company’s billionaire boss, Brian Armstrong, warned investors that a potential recession could lead to a prolonged bear market for cryptocurrencies. The price of bitcoin, at about $ 20,700, has fallen more than 70% from a record high of around $ 69,000 in November.

Surprising fact

The total value of the world’s cryptocurrencies has plummeted around 70% to $ 930 billion from an all-time high of around $ 3 trillion in November. During the same period, technology-heavy Nasdaq has fallen by around 28%.