The digital asset investment landscape witnessed a significant shift last week, with exchange-traded products and funds experiencing their largest weekly outflow since March 22nd. According to a June 17th report by CoinShares, the “Weekly Asset Fund Flows” revealed a net outflow of $600 million.
Bitcoin investment vehicles bore the brunt of the outflows, with a staggering $621 million exiting the market over the week. This trend seemingly aligns with a more hawkish stance adopted by the Federal Reserve. The central bank’s decision to maintain high interest rates likely caused investors to pull back from fixed-supply assets like Bitcoin. Interestingly, short Bitcoin funds, which profit from a decline in Bitcoin’s price, saw a modest $1.8 million in weekly inflows.
Altcoins See Mixed Results
While Bitcoin faced significant outflows, altcoins presented a more diverse picture. Ether investment vehicles attracted $13.2 million in inflows, indicating continued investor interest in the world’s second-largest cryptocurrency. Additionally, LIDO and XRP investment products saw inflows of $2 million and $1.1 million, respectively. Smaller inflows were also observed in BNB, Litecoin, Cardano, and Chainlink investment products.
Despite the positive performance of some altcoins, the overall digital asset market experienced a decline. The combined inflows into altcoins couldn’t offset the significant outflows from Bitcoin, leading to a decrease in total digital assets under management from $100 billion to $94 billion during the week.
Institutional Adoption Lags Behind Initial Hype
The recent outflows raise questions about the pace of institutional adoption within the cryptocurrency space. Despite the initial excitement surrounding the launch of Bitcoin exchange-traded funds (ETFs) in the United States, many experts believe large institutions are still hesitant to fully embrace digital assets.
Marc Degen, co-founder of blockchain firm Trust Square, recently expressed his view that corporate adoption of Bitcoin is still in its early stages. He used Bitcoin ETF inflows to illustrate his point. While Bitcoin ETFs have seen significant inflows, reaching a combined total of $60 billion to $70 billion, Degen argues this needs to be seen in context. Global digital asset funds under management recently hit $100 billion, but this pales in comparison to the capital flows witnessed by established financial institutions.
For instance, Degen compared the inflows into crypto funds with those of JPMorgan. In 2023, the banking giant saw a staggering $489 billion in net new client inflows. This single institution attracted more capital within a year than the entire Bitcoin investment ecosystem has through its numerous exchange-traded funds, products, and offerings.
Franklin Templeton CEO Jenny Johnson echoes Degen’s sentiment. She believes institutional adoption is in its early stages, and a more robust wave of institutional interest and capital deployment is yet to come.
