Investors Flee Crypto Funds at Record Rate Despite Bitcoin’s Bullish Turn

Investors are pulling out of funds exposed to digital assets at a record clip, despite the bullish run in Bitcoin and other cryptocurrencies this year.

Last week brought the fifth consecutive week of outflows from investment products that hold digital assets, with a net $255 million leaving such funds, according to analysis from digital asset manager and trading group CoinShares. That represents the largest single week of outflows on record and 1% of total assets under management.

These…

Investors are pulling out of funds exposed to digital assets at a record clip, despite the bullish run in Bitcoin and other cryptocurrencies this year.

Last week brought the fifth consecutive week of outflows from investment products that hold digital assets, with a net $255 million leaving such funds, according to analysis from digital asset manager and trading group

CoinShares
.

That represents the largest single week of outflows on record and 1% of total assets under management.

These funds are typically exchange-traded products that offer investors a way to gain exposure to digital assets like


Bitcoin

or


Ether

without actually holding crypto, such as the Grayscale Bitcoin Trust, which trades in the U.S. on over-the-counter markets.

The focus of selling fell heavily on Bitcoin, the largest digital asset, which saw $244 million in fund outflows. But it wasn’t even just the bulls that were pulling back, but bears, too. There were notable outflows from short-Bitcoin funds which bet against prices.

It looks like the trend may also be weighing on asset managers themselves: 21Shares closed five exchange-traded crypto products and delisted another as a result of low demand.

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What’s remarkable about the withdrawals from crypto funds is that it flies in the face of price action across spot markets for Bitcoin and other digital assets themselves.

Bitcoin this week had its best four-day stretch since February 2021, and has steadily gained almost 60% so far this year. It has been much the same across the crypto landscape, where the total market capitalization of digital assets has risen to above $1.1 trillion from below $800 billion since the start of 2022.

Write to Jack Denton at jack.denton@barrons.com