Last week saw a positive turnaround in sentiment for digital asset investment products, with inflows reaching a total of $862 million, almost fully recovering from the record outflows of $931 million in the previous week. Bitcoin products attracted the majority of the inflows, totaling around $865 million, thanks to renewed interest from new ETF issuers in the United States contributing $1.8 billion in inflows. However, digital asset management firm Grayscale experienced outflows of $967 million during the same period, while short-Bitcoin products faced outflows totaling $2 million for the second consecutive week.
Despite the overall positive trend in inflows, the activity in exchange-traded funds (ETFs) has started to slow down, with daily trading turnover now at $5.4 billion, a decline of 36% compared to its peak three weeks ago. While the decrease in activity suggests that the initial market hype is cooling off, the current turnover remains significantly higher than the 2023 average of $347 million. Investor sentiment varies on a regional level, with the United States witnessing an additional $897 million in inflows, while Europe and Canada combined experienced outflows of $49 million, bringing the year-to-date outflows for these regions to $785 million. Ethereum, the second-largest cryptocurrency, saw outflows of $19 million for the fourth consecutive week following network upgrades.
In the altcoin market, there were inflows of $18.3 million last week, with Solana emerging as the top performer, attracting $6.1 million in inflows. Other notable inflows were seen in Filecoin, Polkadot, and Chainlink, receiving $3.9 million, $2.4 million, and $1.9 million respectively. However, spot Bitcoin ETFs saw net outflows on Monday as withdrawals from Grayscale’s Bitcoin ETF (GBTC) surged, reaching over $300 million. The combined net outflow for Bitcoin spot ETFs reached $85.84 million, primarily due to the significant outflow from GBTC. On a positive note, BlackRock’s ETF IBIT saw a net inflow of $165 million, while Fidelity’s ETF FBTC recorded a net inflow of $43.99 million, resulting in Bitcoin spot ETFs attracting a cumulative net inflow of $12.04 billion.
The negative flows in Bitcoin ETFs coincide with a correction in the price of Bitcoin, dropping 5% to as low as $66,000. As of now, the leading cryptocurrency is trading at $66,858, down by more than 4% over the past day. The correction comes just weeks before the upcoming Bitcoin halving event, which is expected to occur in 19 days. Overall, the digital asset investment market continues to see fluctuations in investor sentiment and activity, with different regions experiencing varying trends in inflows and outflows. The performance of Bitcoin and altcoins like Solana, Filecoin, Polkadot, and Chainlink also reflects the cautious approach of investors following network upgrades and market corrections.
