A new report shows that crypto investment products have seen the biggest weekly outflow (as much as $32 million) since the beginning of this year. According to Europe’s largest and leading digital asset investment and trading group CoinShares, this $32 million from last week is the largest withdrawal from cryptocurrency funds that the market has seen since December 2022.
It is evident that the United States regulator, Securities and Exchange Commission (SEC) has caused unrest amongst institutional investors with the latest regulatory crackdown in the region. The SEC is showing intense interest in everything crypto including stablecoins, staking, and even crypto custody.
Some market analysts have nicknamed the crackdown “War on Crypto.”
Institutional Investors May Avoid Crypto
Even though there has been a major rally in the price of Bitcoin (BTC) since the beginning of this year, the leading digital currency was the major victim of the negative crackdown.
Almost $25 million worth of BTC was withdrawn from the market. Other affected digital assets are Ethereum (ETH), Cosmos (ATOM), Polygon (MATIC), and Avalanche (AVAX) seeing outflows of $7.2 million, $1.6 million, $0.8 million, and $0.5 million respectively.
The outflows had initially reached about $62 million but at the same time, the report also mentioned that sentiment improved on Friday 17th February as there were more inflows. Short-Bitcoin investment products also had inflows of up to $3.7 million. While blockchain equities’ inflows reached $9.6 million last week as part of its six weeks of consecutive inflows.
“The negative sentiment amongst ETP investors was not expressed in the broader market with Bitcoin prices rising by 10% over the week,” the CoinShares report explained how the rally has caused total assets under management (AUM) to reach $30 billion, “We believe this is due to ETP investors being less optimistic on recent regulatory pressures in the US relative to the broader market.”
Notably, institutions had only started plunging their funds into the crypto industry again in January and by the end of the month, the inflows were reported to be over $117 million.
Even by the first week of February, American custodian bank and securities service company, Bank of New York (BNY) Mellon announced that many institutions including itself are diving deep into crypto.
However, the recent outflow indicates a different stance.
