The end of February was turbulent for exchange-traded cryptocurrency funds, with record outflows from investment funds. In the week leading up to Carnival, investors withdrew $2.9 billion from ETFs, ETPs, and other funds linked to cryptocurrencies.
According to the latest report from CoinShares, released this Monday (03), this was the third consecutive week of outflows. The amount withdrawn raises the total outflows in the last three weeks to $3.8 billion. This is the largest outflow volume ever recorded in such a short period.
Bitcoin and Ethereum cryptocurrency funds under pressure
Bitcoin, the leading cryptocurrency in the market, was the most affected by the wave of outflows. Investors withdrew $2.59 billion from cryptocurrency funds last week, including from Bitcoin ETFs, causing a sharp decline in the asset's price.
Despite this, the report highlights the inflow of $2.3 million into 'short Bitcoin' products, indicating that some investors are betting on the price drop of the currency.
Ethereum, the second-largest cryptocurrency by market value, also did not escape the negative scenario. The cryptocurrency recorded a record outflow of $300 million in a single week, the highest amount ever seen for the asset. Other cryptos, such as Solana and Ton, also faced significant outflows, with $7.4 million and $22.6 million, respectively.
Positive highlights: Sui and XRP
Despite the overall negative scenario for cryptocurrency funds, some altcoins managed to attract investments. Sui was the best performer of the week, with inflows of $15.5 million. Following closely is XRP, which recorded inflows of $5 million. These numbers suggest that even in a volatile market, some assets continue to attract investor interest.
Several factors contributed to the increase in outflows. The report highlights the recent Bybit hack, the more 'hawkish' stance of the Federal Reserve regarding interest rates, and the end of a 19-week streak of inflows, which totaled $29 billion in investments.
Such elements, combined, likely led to significant profit-taking and weakened sentiment towards the asset class. This becomes even more evident when analyzing the origin of the capital withdrawn.
Most of the outflows occurred in the United States, with $2.87 billion withdrawn from investment funds. Switzerland and Canada also recorded significant outflows of $73 million and $16.9 million, respectively. In Brazil, $2.6 million was also withdrawn from these products. On the other hand, German investors saw an opportunity in the price dip, with inflows of $55.3 million.
