Crypto markets down as outflows increase to $142m last week
By Robert Davis
18:26, 20 December 2021
The cryptocurrency market opened down on Monday as outflows from popular exchanges increased to $142m (£107.48m) last week.
Meanwhile, investors are continuing to digest the news that the US Federal Reserve Bank will accelerate its asset purchase taper and the continued spread of the Covid-19 Omicron variant across the globe.
At 17:00 UTC, Bitcoin was down more than 2% to $46,000 per unit while other popular assets like Ethereum and Cardano suffered larger losses of 2.4% and 3.4%, respectively.
Outflow totals
According to a note from James Butterfill, an analyst at CoinShares, last week was the first to record net-negative cryptocurrency outflows in more than 17 weeks.
While Butterfill says there are several reasons for the outflows, he adds that the move is not isolated to the crypto markets as several risky assets have also seen similar declines.
Last week, Bitcoin saw outflows of more than $86m while Ethereum’s outflows totaled $64m.
“The outflows represent only 0.23% of total assets under management (AuM), and from an historical perspective are small relative to the outflows in early 2018 where weekly outflows represented up to 1.6% of AuM,” Butterfill wrote.
Investor sentiment
The outflows are also a sign of souring investor sentiment, according to a note published on Monday by Kevin Kelley, an analyst at Delphi Digital.
“As many of us gear up for the holiday season, the market is not looking quite as cheerful,” Kelley wrote. “Sentiment is dire, momentum is weak, and all this talk about inflation and policy uncertainty has us longing for optimism wherever we can find it.”
Pessimism misguided
Despite the uneasiness many investors are feeling, Kelley adds that the recent pessimism over cryptocurrencies is “sorely misguided.”
For example, Kelley points to the increase in stablecoin transfer volume so far in December as a sign that the market may be reaching bottom.
He also points to the proof-of-stake network migration that Ethereum has planned in 2022 as a reason for investors to be excited about the future of crypto. The change may make it cheaper to transact on the Ethereum blockchain, which could usher in a new era of Ethereum dominance, Kelley said.
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