The digital asset market has been experiencing a bearish sentiment for the second consecutive week, as revealed by the latest “Digital Asset Fund Flows Weekly Report” published by European cryptocurrency investment firm CoinShares on May 2. Outflows from the market totaled $72 million, which could be attributed to the possibility of further interest rate hikes by the United States Federal Reserve this week. Crypto market funds across geographies and providers faced outflows, particularly in Germany and Canada, where outflows reached $40 million and $14 million, respectively.
Bitcoin (BTC) has been hit with the largest amount of outflows, amounting to $46 million. Short-Bitcoin also witnessed outflows at a staggering $7.8 million – its highest figure since December 2022. Nonetheless, short-Bitcoin remains ahead in terms of inflows for the year, with net inflows of $119 million. On the other hand, Ether (ETH) products experienced their most significant weekly outflows since the Merge in September 2022, registering $19 million.
Although it may seem worrisome, there remain a few glimmers of hope amid the downturn. Altcoin funds like Solana (SOL), Algorand (ALGO), and Polygon (MATIC) reported minor inflows, each capturing less than $1 million in capital flows. Additionally, despite last week’s $2.5 million outflows in the blockchain equities sector, the year-to-date net flows still stand in positive territory at $27 million.
CoinShares researcher James Butterfill points out that “volumes remain subdued for the broader crypto market (50% less than year average), while ETP [exchange-traded products] investment product volumes at US$1.7bn for the week are 16% above the year average.” This insight reveals a certain level of cautious optimism within the existing market conditions.
Despite the recent substantial price fluctuations and $340 million worth of leveraged BTC futures contract liquidations, Bitcoin’s price has managed to increase by 72% this year. This impressive growth surpasses the S&P 500 index’s 9% gain, demonstrating the considerable potential and resilience of the digital asset market.
In conclusion, while the market has exhibited bearish tendencies and outflows over the past couple of weeks, certain positive aspects should not be overlooked. The minor inflows in selected altcoin funds and the resilience of Bitcoin’s price growth suggest that there is still potential for recovery and further development within the digital asset market. As with any investment, understanding the factors influencing trends and assessing both the positive and negative aspects will allow for informed decision-making in these volatile times.