Record 9 Straight Weeks of Crypto Investment Products Outflows Pose Concern for the Industry

According to data published by CoinShares on Friday, investment products in the crypto market have witnessed the ninth consecutive week of outflows. This is the longest run of withdrawals ever seen since CoinShares started keeping track of these trends. This trend has led some experts to warn of a potential change of atmosphere for cryptocurrencies.

The Figures Involved

The report reveals that funds that track cryptocurrencies such as Bitcoin and Ethereum experienced outflows of a value of $44 million last week. Apparently, this has brought the total outflows from such funds to around $670 million since mid-May. Amid this period, the prices of major cryptocurrencies like Bitcoin and Ethereum have tumbled, which in turn has likely led investors to sell their holdings. Specifically, as of Friday, Bitcoin’s price was down by about 47% since its record high in April, and Ether was down by 56%

Crypto Market Uncertainty a Key Factor

According to CoinShares Chief Strategy Officer Meltem Demirors, the crypto market crash has not aided investor confidence in the sector. The crash has led to many investors being apprehensive about what to expect from the market and, as a result, have chosen to cut their losses and sell. Demirors said “We’re seeing a bit of uncertainty and a lack of direction, which is keeping investors sidelined. But looking at the broader landscape, we’re still in a bull market. These things happen; cycles are natural, and we’ll continue to see them.”

Negative Sentiments Driving Investors Away

While the current trend may only be temporary, the market sentiment must be positive to attract investors back to the market. Unfortunately, the prevailing negative attitudes towards the digital currency industry may make it hard to entice investors back in. Despite various countries, including El Salvador and Panama, embracing cryptocurrencies, the sector keeps facing scrutiny and regulations in other countries. For instance, a resolution proposing new regulations was introduced to the United States Congress last week.

Mutual Funds Imperiled by Market Crisis

The report indicates that mutual funds that invest in cryptocurrencies lost 6%, reaching the lowest point since the start of the year. The primary concern regarding mutual funds is their dependence on institutional investors. If institutional investors decide to withdraw their investment, the resulting erosion of asset value could force the mutual fund to stop trading.