Key Takeaways
Have crypto funds seen inflows despite the market crash?
Crypto funds attracted $3.17 billion in inflows, while nearly $20 billion in liquidations rocked the market.
Are Altcoin and Ether Funds Showing Weakness?
Yes, both Ether and altcoin funds saw large outflows mid-week.
Crypto investment products shrugged off last week’s brutal market crash and attracted billions in new capital despite widespread panic selling. Investors poured $3.17 billion into crypto funds – a sign of confidence even during periods of sharp volatility and nearly $20 billion in liquidations.
Crypto funds are defying the odds
A recent CoinShares report revealed that while total assets under management (AUM) fell to $242 billion during Friday’s flash crash, inflows into the major crypto funds remained strong.
Source: CoinShares
“There was little reaction on Friday with a paltry outflow of $159 million,” noted CoinShares head of research James Butterfill, proving the sector’s resilience despite billions being liquidated.
Nic Puckrin, crypto analyst and co-founder of The Coin Bureau, also claimed that while the inflows are encouraging, the crash was a wake-up call for overconfident traders. He told AMBCrypto:
“The carnage we saw in the markets this weekend is a brutal reminder that as the crypto market grows and matures, the risks become greater.”
He added:
“The advent of spot crypto ETFs and institutional interest has lulled investors into a false sense of security, but it remains the only market that trades after hours.”
Bitcoin [BTC] led this week with figures of $2.7 billion, bringing YTD inflows to $30.2 billion – still about 30% below last year’s total of $41.7 billion. The increase in participation also pushed weekly trading volumes to a record $53 billion, including $15.3 billion on Friday alone.
Ether funds see a pullback despite weekly gains
Ether [ETH] investment products recorded net inflows of $338 million this week.
However, on October 10, they also experienced the largest single-day outflow: $174.83 million.
Source: SoSoValue
The sell-off dragged cumulative net inflows to $14.91 billion and came amid the volatility of Friday’s sudden crash. According to Butterfill, investors likely saw Ether funds as the “most vulnerable” during the recession.
Puckrin noted:
“Ironically, now that the dust has settled, many blue-chip tokens have seen a strong rebound, including Ethereum, which is looking particularly strong above $4,000. As such, many spot investors find themselves in a similar position to before the flash crash.”
However, despite the decline, trading activity remained high, with $4.77 billion in daily volumes. This indicated continued market involvement even as sentiment took a break from risk.
Altcoins are slowing down
Altcoin-focused funds lost momentum last week, despite continued enthusiasm for upcoming US ETF launches. Solana [SOL] products attracted $93.3 million, while XRP funds added $61.6 million. Both saw sharp declines from the previous week’s increases of $706.5 million and $219 million.
The delay can be attributed to investors’ caution ahead of the liquidation. Puckrin said:
“The biggest shock of the weekend was that traders were forced out of even profitable positions due to auto-deleveraging (ADL) on exchanges – a risk management mechanism that most have never heard of. It’s a blunt instrument that certainly deserves some attention as exchanges assess this massive liquidation event.”
However, that’s not all. Especially since the ongoing US government shutdown has at least 16 crypto ETF applications pending approval.
Source:
According to ETF analyst Nate Geraci, Once the shutdown ends, the market could witness a “flood” of new spot crypto ETFs – potentially a catalyst for the inflows.