Crypto investment products see first outflows of the year amid Bitcoin's 'very high trading volumes'

Crypto-related investment products experienced their first outflow for this year, totaling $21 million, according to CoinShares’ latest weekly report.

The downturn coincided with an unprecedented surge in trading activity among Bitcoin products, reaching a staggering $11.8 billion last week. This remarkable volume was seven times higher than the average weekly volume recorded in the previous year.

Bitcoin leads outflows

The primary contributor to the outflow was Bitcoin, which saw the most significant net outflows of $25 million.

James Butterfill, CoinShares’ head of research, wrote:

“Bitcoin saw minor outflows totalling $25 million, although the $11.8 billion trading volumes represented 63% of all Bitcoin volumes on trusted exchanges, highlighting the ETP activity is currently dominating overall trading activity at present.”

The analyst, however, pointed out that BTC’s recent price weakness presented an opportunity for investors to add to their short-Bitcoin positions. Investment products in this class saw an inflow of $13 million. Over the past week, BTC’s price declined by nearly 5% to $40,511 as of press time, according to CyptoSlate data.

Other digital assets, including Ethereum, Solana, and Litecoin, also witnessed outflows of $13.6 million, $5.8 million, and $1.5 million, respectively.

“Blockchain equities saw further large inflows totaling $156 million, bringing the last nine-week run to $767 million,” Butterfill added.

Regionally, the U.S. stood out with a substantial inflow of $263 million, while Canada and Europe collectively experienced an outflow of $297 million. “There has been minor migration of assets to the U.S., where fees are currently more competitive,” Butterfill explained.

‘Higher-cost issuers’ experience outflows

Several high-cost issuers in the U.S., such as Grayscale, have witnessed a substantial outflow totaling $2.9 billion since the introduction of spot-based ETFs.

Grayscale’s GBTC leads this outflow with more than $2.8 billion withdrawn from the fund. CryptoSlate Insight attributed this trend to GBTC’s elevated 1.5% fee and likely profit-taking by investors exposed to its previous discount.

Another notable high-cost issuer, Purpose Bitcoin, has reported significant outflows exceeding $110 million.

Conversely, the recently introduced ETFs have garnered substantial inflows, totaling almost $4.1 billion during the same period.

These funds have, in part, drawn capital from investors exiting higher-cost ETPs. CryptoSlate reported that the “Newborn Nine” Bitcoin ETFs, led by BlackRock’s IBIT and Fidelity’s FBTC, have collectively accumulated 95,000 BTC, with their combined assets under management (AUM) reaching almost $4 billion as of Jan. 21.