Institutions Withdraw $168 Million from Bitcoin and Crypto Markets Amid ETF Approval Delay : CoinShares

Digital asset manager CoinShares has reported a significant decline in crypto market inflows during the past week, marking the most substantial outflows since March. The latest Digital Asset Fund Flows Weekly Report by CoinShares indicates a loss of $168 million in digital assets over the past week, sustaining a two-week consecutive period of outflows.

The report elaborates that “Digital asset investment products witnessed outflows totaling $168 million, representing the most substantial depletion since the regulatory measures taken against exchanges in the United States in March 2023. The outflows for August now aggregate to a sum of $278 million, transpiring within an exceedingly low trading volume market. Investment products recorded a trading volume of $1.3 billion for the week, which is 16% below the annual average.”

CoinShares attributes the prevailing pessimistic sentiment to emerging indications that the approval process for a spot Bitcoin (BTC) exchange-traded fund (ETF) might experience an extended timeline compared to initial expectations. The report highlights, “We attribute this prevailing negative sentiment to the growing acknowledgment that the establishment of a spot-based Bitcoin ETF in the United States is likely to undergo a more protracted timeline than anticipated. This inference is drawn from recent announcements by the SEC regarding delays.”

Nonetheless, recent developments have shown a glimmer of optimism, as it was reported on Tuesday morning that Grayscale succeeded in its legal battle against the U.S. Securities and Exchange Commission (SEC). The court ruled in favor of Grayscale, deeming the SEC’s rejection of Grayscale’s ETF application to be unjustified.

In terms of the outflows, Bitcoin (BTC) bore the most substantial impact, accounting for a loss of $149 million. The report underlines, “Despite these circumstances, the net inflows for the year remain positive at $265 million. Numerous investors are persisting in divesting from their short positions, resulting in $4 million outflows during the preceding week. Notably, the continuous 18-week span of outflows comprises 89% of the overall assets under management (AuM).”

While products associated with Ethereum (ETH) and Binance Coin (BNB) experienced losses of $16.8 million and $0.2 million, respectively, other alternative coin (altcoin) products fared more favorably. Multi-asset products, encompassing investments in multiple crypto assets, registered inflows amounting to $1.2 million. XRP, Litecoin (LTC), Cardano (ADA), and Solana (SOL) products also observed inflows of $0.5 million, $0.4 million, $0.2 million, and $0.1 million, respectively.

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.