In the wake of numerous regulatory moves from U.S. officials, mainly the SEC, digital asset investment funds experienced a staggering $32 million in net money outflow last week – the greatest retraction since late December 2022, according to CoinShares’ reportage.
The Biggest Money Outflow Has Been in Bitcoin-Linked Funds
Mid-week, outflows reached a historical maximum of $62 million. But with sentiment improving and the uptrend in crypto prices regaining momentum by the week’s end, inflows rose once more.
“The slump among ETP investors did not spread to other markets,” commented the report – Bitcoin prices rising 10% for that same period resulted in total Assets Under Management reaching an all-time high since August 2022: $30 billion!
Last week, Bitcoin-tied investment funds faced the most significant outflows in recent history, reaching $25 million. Conversely, short-bitcoin products welcomed roughly $3.7 million of inflows, with YTD figures standing at a notable $38 million.
Encouragingly for investors and traders alike, Bitcoin funds experienced $116 million worth of net inflows during the final week of January as BTC prices remained steady over that period. Astonishingly enough, since the start of 2021, crypto-related investments have seen total net inflows amounting to an impressive figure – $158 million – making it one of this year’s leading performers on markets thus far!
Outflows Were Also Observed in Other Major Cryptocurrencies
Contrarily, other renowned cryptocurrencies like Ethereum, Cosmos, Polygon, and Avalanche saw outflows of $7.2 million, $1.6 million, $0.8 million, and a meager 0.5 Million, respectively. On the contrary to that, minor inflows ranging from 0.36-0 were experienced by Aave, Fantom, XRP, BNB, and Decentraland, with the most being at $0.36 million.
Investors are evidently showing a more confident outlook towards blockchain equities, as seen with the inflow of $9.6 million last week and six consecutive weeks of such investments. Although Germany and Canada withdrew substantial funds amounting to $23.1 million and $10.6 million, respectively, Switzerland was an exception in this regard – investing close to five-million dollars worth!
The SEC’s Tight Attitude To Cryptocurrencies Has Increased
CoinShares recently reported that the outflows of crypto funds are likely caused by increasing regulatory pressure in the U.S., pointing to ETP investors who have grown less optimistic due to recent developments. Last week, New York’s Financial Services Department directly ordered Paxos (the firm responsible for Binance USD’s minting) to cease production. At the same time, it is also said that SEC will be taking legal action against them regarding their security regulations violation regarding BUSD issuance – a clear indication of stricter measures being taken across all entities within this industry.
The Securities and Exchange Commission (SEC) reached a settlement with crypto exchange Kraken, requiring that they discontinue their staking services or programs to customers in the U.S., along with paying $30 million for allegedly not registering their “staking-as-a-service” program as securities. This groundbreaking agreement serves as an important reminder of why it’s so crucial to stay compliant when offering cryptocurrency products and services.