Crypto Market Seeing Outflows Due To Poor Bitcoin Sentiment

The outflows throughout all the digital asset investment products in the last five weeks have reached the $232 million mark. According to Coinshares, the fund related to Bitcoin has been the driving force for this carnage.

The sentiments and feelings of institutional investors regarding online assets took another hit in the last week. It saw another week where the outflows of the digital asset investment products continued to go up because of the “poor sentiment” regarding Bitcoin.

Outflows Reaching $32 Million in 4 Days

The latest “Digital Asset Fund Flows Report,” by Coinshare which was released on May 22, shows that the outflows were around $32 million for the crypto funds in a span of four days (15th May to 19th May). This marks the fifth consecutive week of outflows from the digital asset investment product.

James Butterfill, the Head of Research at CoinShares noted that the negative sentiment around Bitcoin has remained constant, just like in the last 5 weeks. In the last week, institutional shedding makes up for around $232 million in outflows in that period.

If we look at the five weeks from the 21st of April to the 19th of May, you’ll see that the price of Bitcoin declined to $26,842, which shows a decline of 4.8%. At the time of writing, the price of Bitcoin was around $26,131.40 as per CoinDesk.

Yashu Gola, the market analyst for Cointelegraph, wrote in an article on May 222, that the price of BTC isn’t moving in the last few weeks or so as the traders have decided to adopt the wait-and-watch policy.

The article points out how traders are continuously on the edge and waiting for “potential triggers that could make a huge impact on the price of the top cryptocurrency” in either pushing it in a bullish or a bearish direction.

Gola further pointed out how the Federal Reserve’s decision about hiking the interest rate, which will take place next month, is a primary example of such.

Institutional Shedding of the Bitcoin

Butterfill also pointed out that the investment products related to Bitcoin saw outflows worth $112 million so far in 2023. He also stated that around 90% of this amount has come in May alone, where the short-Bitcoin products saw outflows of around $34.8 million in the ongoing month.

However, Butterfill said that he is not sure why there is a coordinated negative sentiment for Bitcoin-related investment products.

For now, the BTC products saw an outflow of around $33 million in the last week, with partial inflows of products such as Litecoin ($300,000) and XRP products ($200,000).

The second biggest number of outflows for the week was also for short-Bitcoin funds, as investors decreased their exposure by a whopping amount of $1.3 million. Very close, the Ether-related products saw outflows of around $1 million.

Germany on Top with the Highest Outflows

If we look at the number of outflows by countries, then Germany tops the list with the number of outflows touching the $24.1 million mark for the week. In the second position, the U.S.-based exchanges had outflows of around $5 million.

One thing to note is that this development is taking place despite the Economic and Financial Affairs Council of the European Union voting on the progressive Markets in Crypto-Assets (MiCA) regulations two weeks ago

Theoretically speaking, this should have pushed the European crypto market in a bullish direction. On the other hand, the growing regulatory crackdown by U.S. regulators is causing massive disruption in the U.S. market.