The cryptocurrency market has experienced significant turbulence this year, leading to institutional investors pulling out of the market. However, Ethereum has suffered more than other assets, with outflows dragging its total assets under management (AuM) down. The decline in Ethereum’s popularity among institutional investors is a cause for concern and warrants a closer look.
Ethereum, the second-largest cryptocurrency by market capitalization, has struggled significantly after falling below the $1,600 support level. Its performance in recent months has prompted a growing aversion from institutional investors, as highlighted in the Digital Asset Fund Flows Weekly Report by alternative asset manager CoinShares.
CoinShares’ report reveals that Ethereum has experienced a tremendous amount of outflows over the span of several months, leading to a decline in its assets under management. The gravity of the situation is evident from the fact that Ethereum’s outflows exceeded any other crypto asset. Last week alone, a total of $4.8 million flowed out of Ethereum funds, contributing to a year-to-date outflow of $108 million. This represents 1.6% of Ethereum’s total assets under management, the highest percentage of outflows among all assets.
The continuous outflow trend points to a waning interest in Ethereum among institutional investors. This disinterest becomes even more apparent when compared to the inflows seen by altcoins like XRP, which received $0.7 million as investors pulled out of Ethereum. CoinShares implies that Ethereum is currently “the least loved digital asset amongst ETP investors this year.”
While Ethereum bears the brunt of institutional investors’ pullout, it is not the only major cryptocurrency experiencing outflows. Bitcoin, the flagship cryptocurrency, witnessed the largest outflow volumes last week, with $69 million leaving Bitcoin funds. Additionally, blockchain equities suffered another week of outflows, totaling $10.8 million. Overall, this ongoing trend has seen a total of $294 million leaving crypto and blockchain-related funds, accounting for 0.9% of the total assets under management.
The bearish sentiment among institutional investors is reinforced by the significant decline in trading volumes. CoinShares reported that trading volumes last week amounted to just $754 million, reflecting a staggering 73% drop compared to the previous week. This decline in trading activity further underscores the lack of interest in the market.
Despite the negative sentiment of the previous week, the current week shows signs of improvement for the top assets. Both Bitcoin and Ethereum have witnessed significant increases in trading volumes on crypto exchanges, with a jump of 96.28% and 41.16% respectively. This sudden surge in trading volumes could be an early indicator of a potential market reversal after a rocky weekend.
The waning interest in Ethereum among institutional investors raises concerns about the future of the cryptocurrency. While it faces significant challenges in the current market, it remains to be seen whether Ethereum can regain the favor of institutional investors and recover from its recent setbacks. The fluctuating nature of the cryptocurrency market makes it difficult to predict the future trajectory of Ethereum and other digital assets. As market conditions continue to evolve, investors and market participants must closely monitor the changing dynamics to make informed decisions.