The cryptocurrency market is currently experiencing a significant correction, with investors withdrawing $584 million from crypto-related investment products last week, according to a report from CoinShares. This comes as global trading volumes for crypto ETPs hit their lowest levels since the launch of several spot Bitcoin exchange-traded funds (ETFs) in January, totaling just $6.9 billion for the week.
This decline in trading volumes continues a trend from the previous week, where investors pulled out around $600 million, bringing the total outflows over the past two weeks to nearly $1.2 billion. James Butterfill, the head of research at CoinShares, noted that this pessimism among investors is likely in response to concerns about potential interest rate cuts by the Federal Reserve this year.
Bitcoin investment products saw the most significant outflows, totaling $630 million, with Bitcoin ETPs experiencing six consecutive days of outflows in the US. Canada also saw substantial outflows from crypto ETPs, with $109 million withdrawn, followed by Germany and Hong Kong with outflows of $24 million and $19 million, respectively. On the other hand, Switzerland and Brazil recorded inflows of $39 million and $48.5 million, offsetting some of the overall outflows.
In addition to Bitcoin, Ethereum also saw outflows for the first time in weeks, totaling approximately $58 million. Despite these outflows from major digital assets, multi-asset investment products and some altcoins saw significant inflows. Multi-asset products attracted over $98 million, while Solana, Litecoin, and Polygon received $2.7 million, $1.3 million, and $1 million, respectively.
Butterfill believes that these inflows into altcoins indicate a shift in investor focus, with investors seeing the weakness in the altcoin market as a buying opportunity. As the market continues to navigate this correction, it will be interesting to see how investor sentiment and trading volumes evolve in the coming weeks.