Cryptocurrency investment products saw significant outflows amid growing fears of a recession in the United States. This article explores the reasons behind the outflows and their implications for the crypto market.
Points
- Crypto investment products posted $528 million in outflows.
- Bitcoin led outflows with $400 million.
- Ether and Solana also saw substantial outflows.
- Multi-asset products and short-Bitcoin saw inflows.
- Analysts predict further losses for Bitcoin and Ether.
Cryptocurrency assets have started seeing significant outflows amid growing fears of a recession in the United States and geopolitical concerns, according to a new report by CoinShares. The week of July 28 to August 3 saw digital asset investment products posting outflows totaling $528 million, marking the first time in four weeks that outflows have been recorded.
Bitcoin Led Outflows
As the largest cryptocurrency by market value, Bitcoin （BTC） led the outflows, with $400 million withdrawn. This marked Bitcoin’s first outflows after five consecutive weeks of inflows. Ether （ETH）, the second-largest cryptocurrency by market cap, posted $146.3 million in outflows, while Solana （SOL） saw an additional $2.8 million withdrawn.
Multi-Asset Products and Short-Bitcoin Inflows
In contrast to the outflows, multi-asset crypto investment products saw inflows of $18.1 million. Additionally, short-Bitcoin products, which benefit from falling Bitcoin prices, saw inflows of $1.8 million last week, indicating some investors are betting on further declines.
“Blockchain equities continued to see outflows, with last week seeing a further $18 million, in line with outflows from broad tech-related exchange-traded funds,” CoinShares stated.
Analysts Predict Further Losses
As CoinShares’ analysis covered the period from July 28 to August 3, it did not include the latest sharp decline across multiple markets on August 4 and 5. After losing the $69,000 support on July 29, Bitcoin continued to drop below $50,000 on August 5, reaching its lowest price since February 2024.
Following the market drop, 290,000 traders were liquidated in the past 24 hours, with total liquidations netting $1.1 billion, according to CoinGlass data. Analysts are not optimistic about the near-term prospects for Bitcoin and Ether. Markus Thielen, CEO of 10x Research, predicts that Bitcoin could drop to $42,000, while Ether might fall below $2,000.
Conclusion
The significant outflows from crypto investment products underscore the heightened market volatility and investor concerns amid recession fears and geopolitical tensions. While multi-asset and short-Bitcoin products saw some inflows, the broader market sentiment remains bearish, with analysts predicting further losses for major cryptocurrencies.