Dusseldorf The euphoria in the crypto market about a possible Bitcoin ETF has evaporated. The mood has turned negative again: This is shown by data from the asset manager Coinshares, which specializes in digital currencies.
Accordingly, a net $59 million was withdrawn from investment products for digital assets last week. Coinshares records weekly inflows and outflows into financial products such as ETPs, mutual funds and OTC trusts related to Bitcoin, Ether and other digital assets.
This means that in just one week since the beginning of August, more money has flowed into these products than has been withdrawn. In total, the outflows now total $394 million. For comparison: in the entire first half of the year, investment products for digital assets recorded inflows of almost $500 million.
Bitcoin is the hardest hit. Last week, $69 million was withdrawn from products related to the oldest and largest cryptocurrency.
It is fitting that short products, which increase in value when Bitcoin prices fall, recorded the highest inflows in a week since March 2023, at $15 million. According to James Butterfill, head of research at Coinshares, this suggests that sentiment towards crypto assets remains negative.
An important resistance still holds for Bitcoin
“We believe ongoing concerns about asset class regulation and recent dollar strength are the most likely reasons for this,” explains Butterfill. Trading volumes also fell significantly, by 73 percent compared to the previous week to just $754 million last week.
This skepticism is also evident in direct trading with cryptocurrencies. Here Bitcoin is currently trading at just under $26,000. In mid-July it was just under $32,000. This corresponds to a loss of almost 20 percent within two months. So far, the important support level of $25,000 has held.
However, positive news could quickly turn the mood around, as the past has shown. Especially since the US Securities and Exchange Commission has recently lost some cases in court. According to Samer Hasn, analyst at trading platform Xs, investors are currently preparing to trade – in one direction or the other.
Accordingly, asset managers have transferred Bitcoin and Ether, the second largest cryptocurrency, worth several million dollars to crypto exchanges.
Usually such moves indicate an intention to sell. “However, when these transfers come from asset managers and trading companies, they can serve the purpose of managing and providing liquidity,” explains Hasn.
FTX sales could weigh on prices
In addition to regulatory concerns – the US Securities and Exchange Commission had recently intensified its efforts to regulate the crypto market more closely – there is a second aspect that is weighing on prices: the insolvency administrators of the crypto exchange FTX have secured assets worth around seven billion dollars, of which around $3.4 billion in cryptocurrencies.
A court hearing is scheduled to take place on Wednesday that will see a sale of the cryptocurrencies, reports the financial service Bloomberg. This is intended to compensate creditors.
If this plan is implemented, it could significantly increase supply on the market and drag prices down. According to Bloomberg, FTX’s crypto holdings include nearly $1.2 billion in the cryptocurrency Sol, the token of the Solana network, and around $560 million in Bitcoin.
More: Decision on Bitcoin ETF postponed: Crypto world is faced with a lot of resistance