Bitcoin Joins Digital Asset Investment Products that Face Outflows Volatility

Bitcoin and other cryptocurrencies registered notable outflows during the previous week. They saw outflow of totaling US$528 million.

This trend is attributed to a confluence of factors, including heightened fears of a US recession, geopolitical uncertainties, and broader market liquidations across various asset classes.

The outflows primarily stemmed from a US-centric focus, with US$531 million exiting the market.

Germany and Hong Kong also experienced outflows of US$12 million and US$27 million, respectively.

Conversely, Canada and Switzerland saw the price correction as a buying opportunity, registering inflows of US$17 million and US$28 million, respectively.

Bitcoin Joins the Trend Amidst Shocking Outflows

The impact on specific assets was notable. Bitcoin, after five consecutive weeks of inflows, witnessed outflows totaling US$400 million.

This trend was accompanied by the first measurable inflows into short-bitcoin products since June, amounting to US$1.8 million.

Ethereum similarly experienced outflows, totaling US$146 million. This brings the net outflows since the launch of US-based ETFs to US$430 million.

This figure, however, masks the positive inflows of US$430 million generated by newly launched US ETFs, offset by outflows of US$603 million from the established Grayscale trust. European ETPs also saw minor outflows.

The outflows extended to blockchain equities, with last week witnessing a further US$18 million exit. This aligns with the outflows observed in broader tech-related ETFs.

The subdued trading volume of US$14.8 billion last week in ETPs reflects a lower-than-average proportion of the total market, at 25%.

Furthermore, the price correction from Friday’s close resulted in a US$10 billion reduction in the total ETP AuM.

WazirX Halts Withdrawal Services

The recent security breach at WazirX, an Indian cryptocurrency exchange, highlights the escalating problem of cyberattacks targeting the crypto industry.

To mitigate further damage, WazirX temporarily halted withdrawals of Indian rupees (INR) and all cryptocurrencies, while working to address the situation. This incident underscores the growing vulnerability of cryptocurrency exchanges to sophisticated hacking attempts.

The frequency and severity of these attacks are alarming, as evidenced by the recent theft of over $22 million in crypto assets from Lykke UK and Lykke Corp AG.

These events serve as stark reminders of the crucial need for robust security measures and ongoing vigilance within the cryptocurrency ecosystem.