Digital asset investment products saw a significant shift in investor sentiment last week, with outflows totaling $16 million. This marked the end of an 11-week streak of consecutive inflows, according to a report by CoinShares. Bitcoin-based funds experienced the largest outflows, with a total of $32.8 million exiting the market. Short Bitcoin (BTC) investment products also suffered outflows, reaching $0.3 million.
Trading Activity Remains High Despite Outflows
Despite the outflows, trading activity remained higher than the yearly average. A total volume of $3.6 billion was recorded last week, compared to the $1.6 billion average.
Bitcoin Price Decline Ends Eight-Week Streak of Gains
The reversal in investor sentiment coincided with a decline in the price of Bitcoin, which dropped approximately 5% during the week. This brought an end to an eight-week streak of consecutive gains. At the time of writing, Bitcoin is currently trading at $40,800.
Leading asset managers such as CoinShares, Bitwise, Grayscale, ProShares, and 21Shares all experienced net outflows during this period, deviating from the previous trend. CoinShares’ Head of Research James Butterfill believes the outflows were driven more by profit-taking rather than a fundamental shift in sentiment towards digital assets.
An analysis of regional flows shows that the majority of net outflows originated from the U.S. and German markets, amounting to $18.3 million and $9.7 million respectively. On the other hand, Switzerland experienced inflows of $9.1 million, while Canada recorded $6.9 million in inflows. These mixed regional flows suggest that investors are capitalizing on recent gains, securing profits rather than expressing a lack of confidence in digital assets as a whole.
Despite the recent market downturn, Samson Mow, CEO of Jan3, remains bullish on Bitcoin’s future. He believes Bitcoin has the potential to skyrocket to $1 million within a matter of days or weeks following the approval of a spot exchange-traded fund (ETF). Mow highlights the influx of institutional capital expected to accompany the approval of a spot ETF, stating that there will be a torrent of money seeking to purchase the limited available Bitcoin on exchanges. This surge in demand, combined with the scarcity of supply, could result in a rapid and substantial price increase.
Mow compares this anticipated rally to predictions made by entrepreneur Balaji Srinivasan and asserts that the impact of a spot Bitcoin ETF approval on prices will unfold much faster compared to the effects of central bank money printing. While money printing gradually permeates the economy over the years, the approval of a spot ETF could cause a sudden and explosive surge in Bitcoin’s value. Mow anticipates that the rally to $1 million will occur at an unprecedented pace compared to previous Bitcoin bull runs. In 2017, for example, it took nine months to achieve a 20-fold increase in value. However, with the influx of billions of dollars through ETF approvals, Mow expects the timeframe for reaching $1 million to be significantly shorter.
