Crypto investment products record outflows of $147 million alongside Middle East war tension
|- Digital asset investment products witnessed outflows totaling $147 million last week.
- Bitcoin ETFs were the center of focus, with $159 million in outflows after heightened Middle East war tension.
- Ethereum also saw outflows of $29 million, while Solana and multi-asset products recorded inflows.
Bitcoin (BTC) is trading around the $63,000 level on Monday as a CoinShares report reveals that crypto investment products recorded outflows totaling $147 million last week, breaking their three-week inflow streak.
Crypto assets witness outflows stirred by negative flows in Bitcoin ETFs
Crypto ETFs recorded outflows totaling $147 million last week, according to CoinShares' weekly report. The outflows broke a three-week inflow streak of nearly $2 billion.
Crypto ETF Flows (Source: CoinShares)
On the regional level, the US witnessed the highest share of outflows, amounting to $209 million. Germany and Hong Kong also recorded outflows totaling $8.3 million and $7.3 million, respectively.
On the contrary, Canada and Switzerland recorded inflows of $43 million and $35 million, respectively.
Among the asset classes, Bitcoin ETFs were the major focus among investors, with outflows totaling $159 million last week. Conversely, short-bitcoin ETFs witnessed inflows of $2.8 million.
While CoinShares noted that the high outflows were likely a result of the drop in the US Unemployment Rate in September, the Bureau Labor of Statistics only released the data on Friday, which was a positive day for Bitcoin ETFs, per Farside Investors' data.
Bitcoin ETF Flows (Source: Farside Investors)
A close look at the data above reveals that Bitcoin ETFs only recorded outflows last week from October 1-3 — the same period as when Iran sent missiles to Israel, sparking the war tension in the Middle East. Investors may have pulled capital from these ETFs as a risk-off strategy.
Bitcoin is up about 1% in the past 24 hours, trading above the $63,000 level. However, the number one crypto by market capitalization is in the red on the weekly time frame.
However, despite last week's decline, CryptoQuant noted a growing demand for US spot Bitcoin ETFs. The data shows that US spot BTC ETFs went from net selling Bitcoin at 5K on September 2 to buying 7K BTC at the close of the month.
Ethereum ETFs also suffered outflows totaling $29 million after seeing inflows the week prior. In contrast, Solana ETFs witnessed inflows of $5.3 million, while multi-asset crypto products recorded inflows of $29 million.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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