BTC-1.67%
Market Analysis
Weekly Trading Volume for Digital Asset Investment Products at 2-Year Low: Report
Digital assets investment products saw trading volume plummet to a 2-year low last week, according to CoinShares.
Editorial disclosureRead more
All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.
Trading volume in digital asset investment products plunged to a 2-year low last week, the latest weekly report by CoinShares found. However, general investor sentiment around the asset class has improved since mid-November, with Bitcoin seeing $17 million in inflows during that period.
Bitcoin Records $17M in Inflows Despite Lower Trading Volume
Digital asset trading volumes fell to a 2-year low of $677 million last week, according to a report by CoinShares. On a more positive note, digital asset investment products witnessed an improved investor sentiment, with outflows mainly present in short investment products.
The report states that Bitcoin recorded $17 million in inflows as investors have been growing slightly more optimistic since mid-November. Bitcoin inflows since then have amounted to $108 million, translating to 2.1% of total assets under management (AUM).
The improved sentiment coincides with the negative sentiment toward the US dollar. This indicates a strong inverse correlation between digital assets and the greenback. In addition, short-bitcoin investment products recorded a second consecutive week of outflows totaling $3.9 million.
Meanwhile, Ethereum saw a fourth straight week of minor outflows of $2.3 million and $22 million since mid-November. Altcoins saw almost no meaningful activity, with Solana witnessing minor inflows of $0.4 million while Polygon saw minor outflows of $0.5 million.
On the other hand, blockchain-related stocks have been increasingly struggling, including total outflows of $6.6 million. The negative sentiment in this asset class stems from growing concerns over the crypto-mining sector, which has been battered by the crypto winter and energy crisis.
Join our Telegram group and never miss a breaking digital asset story.
Investor Sentiment Improved Since FTX Collapse
The latest CoinShares report suggests that investors’ shaken confidence in digital assets has been somewhat restored since the FTX debacle, which has disrupted the entire crypto industry. Short investment products have seen the largest-ever inflows in the week after the FTX collapse.
The controversial FTX boss Sam Bankman-Fried has agreed to appear before the US Congress on Dec. 13 after US representative Maxine Waters said it was imperative for the billionaire to attend the hearing. Waters also hinted at a potential subpoena if SBF fails to show up.
But Bitcoin, Ethereum, and other cryptocurrencies have been deeply in red even before the FTX implosion. The bear cycle, similar to the ones in 2018 and 2014, started months ago amid 4-decade high inflation and global monetary policy tightening, which sent the dollar to a 20-year high earlier this year.
Do you think bears will continue to dominate the crypto market in 2023? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
