Crypto fund flows switched negative a week ago, after strong inflows a few days before, getting total assets under management for their cheapest since This summer 2021. Additionally, both on-chain signals and also the crypto derivatives marketplace is painting a bleak picture for that near term.
Based on data in the crypto investment and research firm CoinShares, crypto-backed investment funds lost as many as USD 141m in capital a week ago, a clear, crisp reduction in the USD 274m which were added a few days before.
The outflows a week ago mainly originated from funds supported by bitcoin (BTC), which saw outflows of near to USD 154m. For other single-asset funds, changes were minor within the week, with ethereum (ETH) funds losing USD .3m, and solana (SOL) funds adding USD .5m.
The notable exception, however, were the so-known as multi-asset funds, or funds which are supported by several cryptoassets. These funds saw inflows of USD 9.7m, with CoinShares suggesting investors see these funds as “safer in accordance with single line investment products during volatile periods.”
Explaining the moves on the market, analysts at Genesis Global Buying and selling stated inside a note reported by Bloomberg that BTC will probably remain in its current range from USD 29,000 and USD 31,000 “for the following handful of days.”
Others, however, stated more downside volatility can be expected prior to the market once more moves greater.
“If the S&P falls more, which should create the last flush along with a great buying chance for bitcoin. There’s lots of bearishness, and you should be approaching a period when you want to purchase into that within the next handful of several weeks,” Fundstrat Global Advisors technical strategist Mark Newton was quoted as saying within the same report.
Meanwhile, crypto exchange Bybit and research firm Nansen stated in the Condition-of-the-Industry report for May that it’s unlikely you will see “a quick short-term recovery” within the crypto market knowing in the number of stablecoins held by wallets, so it stated rose in April and could after falling in March.
“[…] the stablecoin percentage held by wallets really rose with regards to the declining holding percentage in March,” the report stated, adding the fall in March was “a precursor to some strong rebound inside the broader crypto market.”
Furthermore, the report also stated it has observed an increase in activity around the Bitcoin network since March. The spike might be because of more big tech firms going through the Bitcoin Lightning Network, the report speculated, noting that similar increases in network activity are also seen on Polygon (MATIC) and Solana.
Avalanche (AVAX), however, saw a decrease in on-chain activity because of “a majority of its on-chain activities shifting to the subnets,” the report stated.
Lastly, crypto analytics firm Glassnode authored in the weekly e-newsletter on Monday that BTC has traded lower for eight consecutive days, which makes it the “longest continuous string of red weekly candle lights ever.”
It added that signals from crypto derivatives, such as the implied volatility (IV) of BTC options, suggest there’s still anxiety about further downside for “the next 3 to 6 several weeks.” Additionally, on-chain signals will also be searching less strong with lower interest in blockspace on the Bitcoin and Ethereum systems.
Given these 4 elements, “the demand side will probably continue seeing headwinds,” Glassnode concluded.
At 15:44 UTC, BTC traded at USD 30,450 and it was up 2% per day and lower almost 3% per week. ETH was up almost 4% per day and lower over 3% per week.
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