A new report from CoinShares indicates that when it comes to crypto investment, there may be a divergence in sentiment, depending on the region.
This divergence becomes apparent when a comparison is done between investors based in the United States and those based in Europe.
According to the report, this divergence in sentiment is likely due to the regulatory differences that exist between the regions.
The European trends
A weekly investment into different crypto products in Europe stood at about $16 million, while $14 million was actually pulled out from the crypto market in the United States in the same period.
CoinShares accumulates investment data through a number of crypto-related funds, which includes the suite of funds of Grayscale, ProShares, and many others.
A deeper look into the European trends shows that the largest inflows in the region were in Germany of about $18.1 million.
There were little significant inflows and outflows in other EU countries like France and Sweden in the crypto market.
The largest outflow from the crypto market was seen in Switzerland, as it was around $2.6 million. While there was a bullish uptick, there was still bearish sentiment prevailing amongst European investors in the month.
According to CoinShares, the outflows during the period from the crypto market were about $24 million.
Nonetheless, the outflows in the US were significantly higher in the last month at about $67.5 million and this curiosity behind the divergence.
It was speculated in the report that regulatory differences could be the reason behind the difference in investor sentiment.
Over the summer, the Markets in Crypto Assets (MiCA) was introduced in the European Union, which is a set of regulations developed primarily for the crypto market.
The framework provides clear rules applicable to crypto assets and will go into effect in December 2024.
It is designed to cover a number of aspects of the crypto market, which includes the creation and services related to stablecoins, crypto tokens, and other digital assets.
MiCA will have a significant impact on the crypto landscape in Europe and is undoubtedly a groundbreaking development.
August also saw the launch of the first exchange-traded fund (ETF) in the continent’s Bitcoin spot markets with the Jacob FT Wilshire Bitcoin ETF in Amsterdam.
The crypto debit card named Gnosis Pay, which is visa-enabled, was also launched in Europe.
The US market
In contrast, the United States has been struggling where crypto regulation is concerned because there is no clarity as yet and no high-profile ETFs have been approved for the spot markets.
A number of lawsuits have also been filed by American authorities against some of the biggest players in the crypto industry, such as Coinbase and Binance.
The lack of clear regulations, the legal uncertainties, and the disputes within the government have created a rather challenging environment where crypto investment is concerned.
Therefore, investors have become highly discouraged from investing in the crypto space. The differences appear to be weighing on the minds of investors.
Regulatory bodies in the US, such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) cannot decide which agency has jurisdiction over the crypto market.