Solana Remains Institutional Investors’ Favorite As Outflows Rock Bitcoin, Ethereum

Mila September 10, 2024

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Digital asset investment products have experienced a second consecutive week of outflows, but Solana looks to be bucking the trend. Notably, last week was full of outflows from cryptocurrency-based investment products, amounting to a substantial $726 million.

The outflows were heavily concentrated in two of the largest and most prominent cryptocurrencies, Bitcoin and Ethereum, which corresponded with a lack of bullish momentum in their spot prices. In contrast, Solana-based investment products have continued to defy the broader market trend.

Solana Remains Institutional Investors’ Favorite

Solana has attracted inflows for the second consecutive week, signaling growing investor confidence in the asset. According to CoinShares’ latest weekly report on digital asset investment funds, Solana-based investment products witnessed a total inflow of $6.2 million last week, bringing their year-to-date inflows to $47 million.

While these inflow numbers might be minuscule or little to what we’ve seen with digital asset investment products, the timing has made it somewhat more important. This is because the entire crypto industry has been riddled with bearish sentiment in the past few weeks, which has been reflected in institutional investors, so much so that outflows from digital asset products have matched the largest recorded outflow set in March of this year.

As noted by CoinShares, much of this negative sentiment has been driven by investor expectations surrounding the U.S. Federal Reserve’s monetary policy. Many market participants are anticipating a 25 basis point (bp) interest rate cut following stronger-than-expected macroeconomic data from the previous week. As a result, a significant portion of the outflows came from the United States, which saw a staggering $721 million withdrawn from digital asset investment products. Canada followed behind, experiencing outflows of $28 million.

Unsurprisingly, Bitcoin had the lion’s share of outflows as Spot Bitcoin ETFs registered outflows every single day last week. As such, Bitcoin investment products totaled $643 million in outflows. Ethereum was similarly impacted. Notably, the recently launched Spot Ethereum ETFs, especially the Grayscale Trust, contributed significantly to the overall outflows. Ethereum investment products saw a total of $98 million in outflows as investor interest in the asset waned alongside broader market concerns.

In contrast, a few other digital assets managed to buck the trend and attracted modest inflows. Multi-asset products saw $3.4 million in inflows, while XRP and Litecoin recorded inflows of $1 million and $0.7 million, respectively. Additionally, short Bitcoin products (which benefit from declining prices) experienced inflows of $3.9 million, further emphasizing the bearish sentiment surrounding Bitcoin.

Interestingly, investment products in Europe managed to finish the week with positive inflows. Germany and Switzerland stood out in particular, recording inflows of $16.3 million and $3.2 million, respectively. Other regions, including Australia and Brazil, also saw inflows, with $0.9 million and $3.9 million flowing into their respective digital asset markets.