Investors pulled out some $143 million from digital asset funds as confidence in crypto is flailing.
Crypto fund assets under management fell to the lowest since July 2021 last week because of the recent price crash in cryptocurrencies and equity markets that has been partly driven by the U.S. Federal Reserve’s move to reduce its balance sheet starting next month.
CoinShares reported the value of assets under management held by digital-asset funds dropped to $38 billion, as investors pulled out some $143 million during the week through May 20. It was the year’s second-largest outflow.
“Confidence in crypto has been flailing given both retail and institutional investors that got into crypto over the past year are deeply in the red,” said Edward Moya, senior market analyst at the trading platform Oanda.
Investors diversify from bitcoin
Bitcoin-focused funds suffered the lion’s share of the outflows, with $154 million in outflows last week, shedding about the half of the $299 million inflows netted during the prior week.
Funds managed by Purpose, a fund provider that manages the largest bitcoin exchange-traded fund in North America, saw $150 million in outflows.
Some $154 million flowed out of North American crypto funds, while the funds listed in Europe brought in $12 million.
On a positive note, multi-asset funds – funds that hold multiple cryptocurrencies – stacked up $9.7 million in inflows last week. These types funds might be winners from the volatility in crypto markets as investors look to diversify their holdings, with $185 million in inflows since the start of the year.
“We believe investors see multi-asset investments products as safer relative to single-line investment products during volatile periods,” James Butterfill, CoinShares head of research, said in a note.