Crypto Winter? US Institutional Investors Withdraw from Market
Institutional investors in the United States have seen the largest weekly outflow of 2023 from digital asset investment products after the Securities and Exchange Commission (SEC) targeted all aspects of the crypto industry in the country.
CoinShares reported that last week, digital asset investment products saw outflows totaling $32 million following the regulatory crackdown on the digital asset industry in the US, which targeted staking services, stablecoins, and crypto custody.
The regulatory crackdown and outflows from Bitcoin
The outflows hit $62 million midway through last week but slowed down by the end of the week as sentiment improved. Most outflows (78%) were from Bitcoin-related investment products, which saw a decline in value. The firm attributed the outflows to ETP investors being less optimistic about recent regulatory pressures in the US.
Positive sentiment from the broader markets
The broader markets did not reflect negative sentiment from institutional investors, which saw a 10% gain for the period. This pushed the total assets under management for institutional products to $30 million, the highest level since August.
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Assets under management for institutional products increase
Institutions had started pouring capital back into crypto funds in January, with inflows totaling $117 million in the last week of the month, reaching a six-month high. However, funds have seen outflows for the past two weeks following four weeks of inflows in January.
This week in Fund Flows, by our Head of Research @jbutterfill :
Digital assets see US$32m in outflows, but rising prices push AuM to highest since August 2022.
Read the full report – https://t.co/EIXblrOBcL
Get a comprehensive view of last week’s crypto flows 🧵 (1/5) pic.twitter.com/WvJk15WAWs
— CoinShares (@CoinSharesCo) February 20, 2023
Blockchain equities buck the trend
There were outflows for Ethereum and mixed-asset funds. Still, blockchain equities bucked the trend with inflows totaling $9.6 million for the week.
Regulatory enforcement actions affecting sentiment shift
The regulatory enforcement action responsible for the sentiment shift includes the SEC’s charges against Kraken for its staking services on February 9. A few days later, it sued Paxos over minting Binance USD. Last week, it proposed changes targeted at crypto firms operating as custodians.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
