The continued crackdowns on digital assets, particularly cryptocurrencies, plus scandals plaguing the market had turned investors restless. Opting to safeguard their money amid these seemingly turbulent times, digital asset funds totaling $32 million have been pulled out just last week.
Largest Ever Withdrawal in Digital Asset Funds
The previous week marked the largest withdrawals ever witnessed in cryptocurrency funds since August 2022 according to CoinShares. In fact, the outflows even touched an all-time high record of $62 during the middle of the week. However, investors seemed to ease up a bit as the week drew to an end and cryptos resumed their upward momentum, setting the numbers to $32 million.
Investments related to Bitcoin had the largest slice of the outflows summing up to $25 million. Meanwhile, inflows for Bitcoin shorts were at $3.7 million.
The influx of Bitcoin investments started at $116 million as of the last week of January. The bullish sentiment towards it and other crypto investments for this year heavily contributed to the trend.
Among the popular altcoins, Ethereum saw outflows of $7.2 million in the same period. On the other hand, Cosmos, Polygon, and Avalanche experienced withdrawals of $1.6 million, 0.8 million, and 0.5 million, respectively. Some of the other famous altcoins like XRP, Aave, BNB, and Decentraland saw inflows between 0.26 to 0.36 million.
The source highlighted though that blockchain equities have been displaying an uptrend as shown by its six consecutive weeks of inflows. Last week, the figures were recorded at $9.6 million.
Where the Negative Sentiments Lie
When it comes to the area of concentration, it was revealed that Germany and Canada accounted for most of the outflows last week. The negative sentiments of investors in these locations saw withdrawals of digital assets funds amounting to $23.1 million and $10.6 million, respectively.
Switzerland, which is considered to be a significant region for the global blockchain industry, showed a more positive outlook on the market. The country took $4.9 million in inflows in the same period.
Market Behavior Blamed on US Crackdowns on Crypto
The negative sentiments of digital asset funds investors were attributed to the continued crackdowns of the US government over cryptos, which was believed to have a huge impact on the overall market. In recent weeks, the US Securities and Exchange Commission has been apparently running a witch hunt for crypto-related firms.
Still reeling from the effects of the bearish market and the FTX fallout that dragged down other firms along the way, SEC hasn’t been pulling any punches as it targeted the crypto-staking ventures of Kraken. The US regulator argued that this particular scheme of the crypto firm should have been registered with them because of its classification as a security. Thus, the company was consequently fined $30 million for its shortcoming. This has also led to the shutdown of Kraken’s crypto staking program.
Before the Kraken affair, Genesis and Gemini’s crypto lending schemes had to bear the brunt of the SEC’s iron hand, too, as their products were considered to be a form of security.
Author’s Thoughts
The decentralized nature of cryptos is now in question as some governments continue to dip their hands into it. However, it should not be denied that they have been nesting places for all sorts of criminal activities over the years like fraud, money laundering, rug pulls, and other scams.
With the right set of regulations, these nefarious activities may be curbed down and make the crypto landscape much safer for all sorts of investors. Getting the right pieces in place may eventually contribute to its better market outlook in the near future.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager for a consultancy firm.
