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Investor Caution Persists as Digital Asset Investment Products See $126M in Outflows

In the previous week, there were minor outflows totaling $126 million from digital asset investment products, reflecting investor hesitancy amid a pause in positive price momentum. Despite a slight uptick in trading volumes from $17 billion to $21 billion week-on-week, CoinShares’ report highlights a decrease in activity within exchange-traded products (ETPs) and exchange-traded funds (ETFs) compared to the broader market. While ETP/ETF activity comprised 40% of total volumes on reputable exchanges over the past month, it dropped to 31% last week, signaling a cautious stance among investors.

Bitcoin Sees $110M in Outflows

According to the report, Bitcoin saw outflows of $110 million but maintained positive inflows of $555 million month-to-date. Short-bitcoin, which had been experiencing outflows for the past three weeks, saw minor inflows of $1.7 million, likely taking advantage of the recent price weakness. On a relative basis, Ethereum faced the most significant challenges, with outflows of $29 million last week, marking its fifth consecutive week of outflows. However, altcoins had a notable week, with several lesser-known names attracting inflows. Decentraland, Basic Attention Token, and LIDO recorded inflows of $4.9 million, $2.9 million, and $1.8 million, respectively.

Sentiment remains divided across regions. The United States saw the largest outflows, amounting to $145 million, followed by Switzerland and Canada with outflows of $5.7 million and $6 million, respectively. Conversely, investors in Germany seized upon recent price weakness, injecting $29 million in inflows last week.

This cautious sentiment reflects investors’ apprehension regarding current market conditions and the uncertain trajectory of digital assets. Last week, investors collectively allocated $646 million into crypto products, driving year-to-date inflows to an unprecedented $13.8 billion, surpassing the previous year’s total of $10.6 billion. Bitcoin remained the focal point for investors, with inflows totaling $663 million.

Bitcoin Surges as Hong Kong Approves Spot ETFs

Bitcoin surged by 2.8% within a 24-hour period, surpassing a trading value of $66,500, while Ether (ETH) rose to $3,240 following announcements from multiple issuers in Hong Kong regarding the approval of spot crypto ETFs.

China Asset Management, Bosera Capital, and other applicants utilized the social media platform WeChat (Weixin) to share news of their approval to list spot Bitcoin and Ether ETFs in Hong Kong. This development holds significance, with analysts forecasting that mainland Chinese investors could potentially inject $25 billion into Hong Kong-listed spot Bitcoin ETFs through the Southbound Stock Connect program.

The Southbound Stock Connect facilitates qualified mainland Chinese investors’ access to eligible shares listed in Hong Kong.

Meanwhile, there’s anticipation of a significant outflow of Bitcoin from miners in the months following the upcoming halving event. In a recent analysis, Markus Thielen, the head of research at 10x Research, estimated that Bitcoin miners could potentially liquidate approximately $5 billion worth of BTC after the halving.

Thielen also emphasized that this selling pressure from miners might persist for four to six months, potentially resulting in sideways movement in Bitcoin’s price during that period, akin to what has been observed in previous halving cycles.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

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