- Digital asset investment products saw $415M in outflows after 19 weeks of inflows
- Bitcoin outflows totaled $430M, while Solana and XRP saw inflows of $8.9M and $8.5M.
- US saw $464M in outflows from crypto ETPs, with altcoins like Solana attracting inflows.
Digital asset investment products have experienced significant outflows for the first time since a 19-week streak of inflows post-US election. CoinShares data shows outflows totaling $415 million, as a result of macroeconomic factors, including the US Federal Reserve’s hawkish stance and higher-than-expected inflation data. Despite these outflows certain assets saw inflows reflecting ongoing investor interest in specific altcoins.
Bitcoin Faces the Largest Outflows
According to CoinShares data, by interest rate anticipation, Bitcoin became the most affected digital asset and recorded $430 million of withdrawals from investor portfolios. Notably, investment funds withdrew from Bitcoin following Federal Reserve Chair Jerome Powell’s remarks about delayed interest rate reductions. Inflation exceeding market expectations also contributed to the withdrawal of funds from Bitcoin-based investment products. Despite the major Bitcoin price decline, it failed to generate substantial investments in short-Bitcoin products.
The United States led the outflow activity in digital assets with $464 million withdrawn while other countries remained relatively unaffected by the market fluctuations. During this period, Switzerland, Germany, and Canada accounted for minimal net inflows worth $10.2 million, $21 million and $12.5 million, respectively. However, the digital asset outflows did not discourage market participants from showing interest in altcoins.
Solana and XRP Attract Investor Attention
During this period, Bitcoin experienced declines while Solana (SOL) and XRP saw substantial inflows. The Solana platform attracted the biggest asset inflows, amounting to $8.9 million. XRP came in second after Solana with $8.5 million, and Sui obtained $6 million in inflows. Solana and XRP had huge inflows due to the US SEC’s approval of ETFs.
Analysts predict that Solana and XRP ETFs will likely gain approval, with Solana having a 75% probability and XRP having a 65% probability. The possible approval would boost institutional usage of these assets, which should lead to increased investments. Potential ETFs generate optimistic expectations that oppose Bitcoin outflows, redirecting investor attention toward alternative digital assets.
In addition to the inflows, Solana and XRP received additional investments and positive developments in blockchain equity markets. During Q3, blockchain equities attracted $20.8 million worth of investments, which boosted the total annual investment to $220 million. The changes in investor choices toward alternative assets beyond Bitcoin suggest this tendency might persist over the upcoming weeks based on economic developments.