Crypto Funds Under Management Drop to a Yearly Low
Institutional investors have been pulling money out of digital asset investment products, with outflows reaching $141 million last week.
This is the lowest level since July 2021, and coincides with a choppy week of trading for various crypto assets including Bitcoin.
Despite the outflow, Bitcoin's price is still up for the year and hovering around the $30k mark.
The amount of cash tied up in cryptocurrencies has dropped to a new low, not seen since July 2021
Outflows from digital asset investment products totaled $141 million last week. This caused the total assets under management (AUM) by institutional funds to drop to $38 billion. This is the lowest level since July 2021.
The latest edition of CoinShare's weekly Digital Asset Fund Flows report shows that after a weekly decline of $154 million, Bitcoin (BTC) was the primary focus of outflows.
This removal of funds coincided with a choppy week of trading. The price of BTC hovered between $28,600 and $31,430.
Despite the sizable outflow, there was a net positive flow for BTC in May at $187.1 million. The year-to-date figure for BTC is $307 million.
On a more positive note, last week saw inflows of $9.7 million into the multi-asset category of investment products. This brings the total yearly inflow to $185 million, which is 5.3% of the total AUM.
The increased inflows into multi-asset investment products during volatile periods could be because they are seen as being safer than single line investment products. So far in 2020, these investment products have only experienced two weeks of outflows.
The alternative cryptocurrencies (altcoins) Cardano and Polkadot led the inflows with increases of $1 million and $700,000 respectively, followed by $500,000 worth of inflows into XRP.
The latest data from CoinShares shows $4.57 billion worth of assets were traded during the week ending
Out of all the assets covered, Ethereum ( ETH ) has seen the worst performance so far this year, losing $44 million in May. It's also lost $239 million YTD.
The strengthening dollar is still impacting the crypto market negatively.
The interest in digital asset investment products is declining, while the dollar is getting stronger. According to cryptocurrency market intelligence firm Delphi Digital, the dollar has been “one of the most important macro factors driving asset prices over the last 6 months”.
The following chart shows the U.S. dollar currency index over the course of the last week.
The chart above shows that the Dollar Index (DXY) has risen from 95 at the start of the year, to 102 on May 23rd. This is a year-over-year change of 6.8%, which is the fastest pace of change in recent history. This caused the DXY to break out of the range it had been stuck in for the past 7 years.
The DXY, or US Dollar Index, has been consistently dragging down risk asset performances over a certain period of time.