The End of a Winning Streak: Crypto Funds Experience Outflows After Recent Market Crash

Cryptocurrency investment products have failed to maintain their recent inflow success, experiencing negative flows last week following the significant market downturn referred to as ‘Black Friday’. According to CoinShares, crypto exchange-traded products (ETPs) faced $513 million in outflows, ending a two-week streak that had accumulated $9.1 billion.

In light of the $668 million outflows attributed to the ‘Binance liquidity cascade’ on October 10, CoinShares Head of Research, James Butterfill, remarked that the ETP market did not respond with the same level of panic as the spot market did.

Bitcoin Sees Most Outflows

Bitcoin (BTC) was chiefly responsible for the downturn in crypto ETP holdings last week, with outflows amounting to $946 million. This decline has reduced year-to-date inflows to $29.3 billion, which remains significantly behind last year’s tally of $41.2 billion, Butterfill highlighted.

Conversely, Ether (ETH) appears to be flourishing, as investors have shown interest in purchasing during price dips, with a notable $205 million influx. Remarkably, a 2x leveraged Ether ETP attracted the largest inflow, totaling $457 million.

Crypto ETP flows by asset as of Friday Crypto ETP flows by asset as of Friday (in millions of US dollars). Source: CoinShares

Both Solana (SOL) and XRP (XRP) saw further inflows due to positive sentiment surrounding new ETP launches, accumulating inflows of $156 million and $74 million respectively. Particularly, Solana ETPs recorded inflows that surged by 67% compared to the previous week.

Decline in Market Sentiment

The recent outflows from crypto ETPs coincide with a drop in the Crypto Fear & Greed Index, a metric that gauges the overall market sentiment in the cryptocurrency sector, which has plummeted to levels not observed since April.

According to data from Alternative.me, this index fell to a score of 22 last Friday as Bitcoin dipped below $105,000, indicating a state of heightened fear among BTC investors.

The Crypto Fear & Greed Index The Crypto Fear & Greed Index. Source: Alternative.me

As of Monday, the ‘Fear’ sentiment was still predominant with a score of 29. The lowest recorded index score this year was 10 in late February, coinciding with a sharp decline in Bitcoin’s value from $96,000 to approximately $84,000.

By the time of this update, Bitcoin was trading at $111,019, reflecting a 3% decrease over the past week and down nearly 4% for the month. Ether was trading at $4,035, down approximately 3% weekly and 9% over the last 30 days.