Trading volume for crypto investment products hit a two-year low

by Arthur · August 29, 2022

Outflows from bitcoin products are partly due to hawkish rhetoric from the Fed, says CoinShare’s head of research
Inflows to ether offerings are cooling as investors may wait for the merger before adding to positions

Trading volume in crypto investment products last week hit the lowest levels since October 2020 as August outflows continued, according to CoinShares data.

Those offerings hit trading volumes of $901 million last week, significantly lower than the weekly average so far this year, which was $2.4 billion as of Aug. 8.

Digital asset investment products also saw net outflows of $27 million last week, which was slightly higher than the $9 million in outflows from the previous week, the data showed.

“While history indicates this is partly due to seasonal effects, we believe it also highlights continued apathy following recent price declines,” CoinShares head of research James Butterfill said in the crypto investment firm’s Monday report.

Bitcoin and ether were trading at about $20,170 and $1,510 at 11:00 a.m. ET on Monday — each down about 7% over the past seven days.

Last week’s negative net flows were driven by $29 million in outflows from bitcoin products. Investment products focused on shorting bitcoin saw small inflows of around $1 million.

“Both imply minimal but continued investor caution that we believe is due to the ongoing hawkish rhetoric from the US Federal Reserve,” Butterfill added.

Fed Chairman Jerome Powell warned during remarks Friday at the Jackson Hole Economic Symposium that sustained price stability remains a long way off. After Powell’s comments, some analysts said they were predicting another rate hike of 75 basis points in September.

Last week’s outflows marked the third consecutive week of negative outflows for crypto investment products, amounting to $46 million over that span. This trend comes after net inflows into crypto investment products totaled $474 million in July – the largest monthly total in 2022.

The influx of money into such offerings last month was driven in part by a reversal in ether products, which saw flows of $138 million in July, compared with a combined negative net flow of about $450 million in the previous six months.

Ether-focused products saw small outflows of about $1 million last week. The figure suggests that despite improved confidence due to Ethereum’s upcoming merger next month, investors prefer to wait for the blockchain’s transition from proof-of-work to proof-of-stake before adding to positions, Butterfill said.

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Ben Strack

Ben Strack is a Denver-based reporter covering macro and crypto-based funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Before joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local Long Island newspapers. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]