Digital asset investment products have seen a second consecutive week of outflows, but Solana appears to be bucking the trend. Notably, last week was filled with outflows from cryptocurrency-based investment products, accounting for a substantial $726 million.
The outflows were heavily concentrated in two of the largest and most prominent cryptocurrencies, Bitcoin And Ethereumwhich corresponded to a lack of bullish momentum in their spot prices. In contrast, Solana-based investment products continued to defy the broader market trend.
Solana remains a favorite with institutional investors
Solana has attracted inflow for the second consecutive weekindicating growing investor confidence in the asset. According to CoinShares’ last weekly report Digital asset mutual funds saw total inflows of $6.2 million last week, bringing inflows to $47 million so far this year.
While these inflow numbers may be minimal or small compared to what we have seen in digital asset investment products, the timing has made it possible something more important. This comes as the entire crypto industry has been plagued by a pessimistic sentiment in recent weeks, which has also been reflected among institutional investors. So much so that outflows from digital asset products matched the largest outflows ever in March of this year.
As CoinShares noted, much of this negative sentiment has been driven by investor expectations surrounding the U.S. Federal Reserve’s monetary policy. Many market participants are expecting a 25 basis point (bp) rate cut following stronger-than-expected macroeconomic data last week. As a result, a significant portion of the outflows came from the United States, where a staggering $721 million was withdrawn from digital asset investment products. Canada followed with $28 million in outflows.
It’s no surprise that Bitcoin had the lion’s share of the outflows, as Spot Bitcoin ETFs registered outflow every day last week. As such, Bitcoin investment products totaled $643 million in outflows. Ethereum was similarly impacted. Notably, the recently launched Spot Ethereum ETFs, specifically the Grayscale Trust, contributed significantly to the total outflows. Ethereum investment products saw a total of $98 million in outflows as investor interest in the asset waned amid broader market concerns.
In contrast, a few other digital assets managed to buck the trend and attracted modest inflows. Multi-asset products saw $3.4 million in inflows, while XRP and Litecoin recorded $1 million and $0.7 million inflows, respectively. Additionally, short Bitcoin products (which profit from falling prices) saw inflows of $3.9 million, further highlighting the bearish sentiment surrounding Bitcoin.
Interestingly, investment products in Europe managed to close the week with positive inflows. Germany and Switzerland in particular stood out, with 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.
Main image created with Dall.E, chart from Tradingview.com