Heavy Outflows Force Investors to Seek Refuge In Multi-crypto Investment Products

Crypto analytics firm CoinShares recently published a report on the state of the crypto market during the third week of May 2022. With the crypto market staying under overall pressure, digital assets investment products registered $141 million in net outflows last week.

The ongoing volatility in the crypto space has led investors to lose confidence with the overall sentiment turning increasing bearish. James Butterfield, head of research at ChoinShares writes:

“Outflows totalling US$154m were seen in the Americas while Europe saw inflows totalling US$12.4m”.

Also, the total assets under management have dropped to their lowest since July 2021, at $38 billion. After the previous week of strong inflows, the Bitcoin funds failed to keep the momentum going. Last week, Bitcoin funds registered total outflows of $154 million. Similarly, short Bitcoin saw net outflows at $1.1 million last week.

The positive thing is that the year-to-date flows remain net positive at US$307 million.

Multi-Crypto Investment Products Perform Better

Instead of opting for a single crypto-focused product, investors have opted for multi-crypto investment products last week. Butterfield noted:

Multi-asset (multi-crypto) investment products remain the stalwart with inflows totalling US$9.7m last week. Inflows year-to-date represent 5.3% (US$185m) of AuM. The investment products have seen only two weeks of outflows this year, much lower relative to its peers.

He further adds that during periods of extreme volatility, investors see multi-asset investment products as a safer alternative. Besides, there were also some minor inflows across the broader altcoin category. Altcoins like Cardano and Polkadot saw inflows totaling at USD 1 million each.

Cryptocurrency investments have remained volatile throughout the month of May as the market has shown extreme volatility following the collapse of the Terra ecosystem. Furthermore, the sell-off in the U.S. equity market has put additional selling pressure on the crypto space as investors have been moving funds to risk-off assets in these times of uncertainty.