Crypto Market Sees $1 Billion Outflows—Bitcoin and Select Altcoins Show Resilience

The latest report from CoinShares, a leading digital asset investment firm, reveals that last week’s performance for crypto asset investment products was mixed.

According to the report, the market experienced inflows totaling $308 million, marking a continuation of positive trends. However, there was also a series of outflows that amounted to roughly $1 billion.

Deciphering The Fund Flows

The data shared by CoinShares highlighted substantial outflows, with December 19 witnessing a single-day outflow of $576 million. The final two days of the week contributed an additional $1 billion in total outflows, raising concerns among market participants about sustained investor sentiment.

James Butterfill, Head of Research at CoinShares, explained that these outflows “coincided with a price correction” and “followed the hawkish outlook” presented by the Federal Reserve during its Federal Open Market Committee (FOMC) meeting.

According to Butterfill, the market reacted to the revised “dot plot,” which suggested potential future interest rate hikes. Despite these notable outflows, the cumulative impact on total assets under management (AuM) was relatively minor, equating to just 0.37% of total AuM.

Butterfill further noted that this event ranks as the 13th largest single-day outflow recorded, with the most significant outflow occurring in mid-2022 after a similar FOMC announcement.

While the headline numbers suggest market caution, Bitcoin (BTC) showed resilience, managing net inflows of $375 million despite intra-week volatility. Notably, short Bitcoin products saw minimal activity, indicating continued investor confidence in Bitcoin’s long-term potential.

Altcoins and Multi-Asset Investment Trends

The report further revealed the contrasting performances between various altcoins and multi-asset investment products. Particularly, outflows from multi-asset funds were quite significant hitting $121 million, as investors took a more selective, asset-specific approach.

Such behavior indicates investors are becoming pickier and targeting assets with firmer fundamentals and the potential to grow. Ethereum (ETH) remained a prominent performer, securing $51 million in inflows over the week.

These inflows reaffirm Ethereum’s position as a key player in the digital asset space, driven by sustained institutional interest and optimism surrounding its technological upgrades.

However, not all major altcoins shared this positive momentum. Butterfill reveals that Solana (SOL) experienced $8.7 million in outflows, contrasting sharply with Ethereum’s positive movement.

It is worth noting that the discrepancy suggests a divergence in investor sentiment between these two major assets, potentially influenced by ongoing ecosystem developments and perceived risks.

In contrast, following ETH, XRP emerged as one of the standout altcoin performers, recording $8.8 million in inflows. Similarly, Horizen (ZEN) and Polkadot (DOT) reported inflows of $4.8 million and $1.9 million, respectively, highlighting a preference for specific altcoins despite broader market volatility.

These inflows suggest continued investor confidence in the long-term potential of select blockchain ecosystems, even amid short-term corrections.

Featured image created with DALL-E, Chart from TradingView