Ben Strack

As bitcoin ETF trading volumes ascended to new levels last week, inflows did the same — then reversed course.&nbsp;



Net inflows into the segment of 10 US funds turned negative on Friday as BlackRock’s fast-growing ETF was unable to fully offset the assets bleeding out of Grayscale Investments’ offering.



BlackRock’s iShares Bitcoin ETF (IBIT) tallied inflows of about $203 million on Friday, according to BitMEX Research data.&nbsp;



Three other such funds — the Fidelity Wise Origin Bitcoin Fund (FBTC), the Bitwise Bitcoin ETF (BITB) and the Ark 21Shares Bitcoin ETF (ARKB) — contributed combined net inflows of roughly $150 million.&nbsp;



But net outflows from the Grayscale Bitcoin ETF Trust (GBTC) — a fund priced significantly higher than competitors at 1.5% — amounted to $492 million on Friday, pushing the segment’s flows negative for the day.



Read more: <a href="https://blockworks.co/news/bitcoin-etf-net-inflows-positive">Bitcoin ETF net inflows stay positive despite GBTC $600M exodus</a>



Net outflows were $140 million Friday, marking just the eighth day of negative flows for the 10 funds in 35 trading days. The BitMEX Research data excluded flows from WisdomTree’s bitcoin fund — an ETF that has failed to see material flows following its first week of trading.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">[1/4] Bitcoin ETF Flow &#8211; 01 March 2024 Almost all data in, just missing Invesco $139.5m net outflow on 1st March, due to large $492m GBTC outflow <a href="https://t.co/6dSkQ8ZNNG">pic.twitter.com/6dSkQ8ZNNG</a>&mdash; BitMEX Research (@BitMEXResearch) <a href="https://twitter.com/BitMEXResearch/status/1763863079421403543?ref_src=twsrc%5Etfw">March 2, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Still, the Friday outflows came during a week in which the fund category saw its <a href="https://blockworks.co/news/bitcoin-etf-inflows-new-peak">highest single day of net inflows</a> — amounting to $673 million on Feb. 28.



The category enjoyed about $1.7 billion of net inflows last week — second only to <a href="https://blockworks.co/news/bitcoin-etf-volumes-spike">the week spanning Feb. 12 to Feb. 16</a>, during which that number eclipsed $2.2 billion.&nbsp;



Industry watchers have closely tracked net flows into the US bitcoin products to get a sense of BTC demand from investors who previously did not have easy access to the asset. The Securities and Exchange Commission changed its years-long stance by <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">allowing such products to come to market</a> in January.&nbsp;&nbsp;



Net inflows for the 10 offerings stands at nearly $7.4 billion to date despite GBTC weighing down that total with net outflows of about $8.9 billion.&nbsp;&nbsp;&nbsp;



<h2 class="wp-block-heading">Heightened trading volumes, the new normal?</h2>



In terms of bitcoin ETF trading volumes, last week was by far a record.&nbsp;



The trading volumes total for the 10 offerings was roughly $22 billion, Bloomberg Intelligence analyst Eric Balchunas said in a Friday X <a href="https://twitter.com/EricBalchunas/status/1763688112457203956">post</a>.&nbsp;



Trade volumes <a href="https://blockworks.co/news/bitcoin-etf-7b-record-volume">hit an all-time high of more than $7.6 billion</a> on Feb. 28, as Thursday and Friday reflected the second- and third-best totals, respectively.



IBIT’s trading volumes exceeded $1 billion during all five days last week, peaking at about $3.3 billion on Wednesday.&nbsp;



“Will this subside or is [the] new normal here?” Balchunas said. “We&#8217;ll know next [week].”



Read more: <a href="https://blockworks.co/news/bitcoin-etfs-btc-supply">Bitcoin ETFs now hold nearly 4% of all bitcoin — and they’re not slowing down</a>



Beyond just the US bitcoin funds, crypto investment products as a whole reached more than $30 billion last week, according to CoinShares data.&nbsp;



This was, at times, the equivalent of half of global bitcoin daily trading volumes on trusted exchanges, CoinShares research head James Butterfill wrote in a Monday blog <a href="https://blog.coinshares.com/volume-172-digital-asset-fund-flows-weekly-report-6e6506a5c274">post</a>.



Ethereum-focused products saw about $85 million of net inflows last week — its largest weekly total since July 2022.



Bitcoin’s price hovered around $65,000 at 7:30 a.m. ET Monday — up 27% from a week ago. ETH was at about $3,500, a nearly 15% rise over the past seven days.&nbsp;



Crypto products’ assets under management stood at nearly $83 billion, Butterfill noted — just short of the $86 billion high set in November 2021.



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Bitcoin ETF snapshot: Record volumes lead to second-best weekly inflows

Sebastian Sinclair

Hong Kong has seen a small spike in interest from fund managers looking to handle crypto for their clients.



Local managers in charge of funds with 10% gross asset value in digital assets need to apply for an upgrade to their necessary “Type 9” license. Until now, interest has been fairly muted. 



Only 10 fund managers across Hong Kong have upgraded their licenses to manage crypto since the Securities and Futures Commission (SFC) issued guidance in 2019, Michael Wong, partner at law firm Dechert, told Blockworks.



Interest appears to be rising, with three or four of that cohort upgrading in the last six months. Wong expressed the licensing application with the SFC is now a lot smoother and shorter than in the past.



“The SFC is more comfortable granting the ‘virtual asset license upgrade’ to fund managers nowadays, as long as the fund managers have requisite experience and expertise, and appoint appropriate service providers including trading platforms, custodians, fund administrators and auditors,” he said.



Interest in Hong Kong’s crypto future has likely been spurred to its business-friendly environment, low tax rates, quality workforce and geographic proximity to mainland China. Wong noted that the SFC is now allowing managers to invest in a larger universe of digital assets and establish more complex products focused on Web3.



“We expect more fund managers to upgrade their licenses in the future,” Wong said. “Fund managers are increasingly looking to set up their business in Hong Kong and obtain the relevant licenses to manage virtual assets and conduct fundraises from investors.”



<h2 class="wp-block-heading">Hong Kong wants another run at being a crypto hub</h2>



Hong Kong’s government has pledged a renewed focus on growing the local crypto sector and local regulators have <a href="https://blockworks.co/news/hong-kong-pushes-web3-adoption" target="_blank" rel="noreferrer noopener">signaled</a> a willingness to cooperate. 



It seems to be working: the city-state’s <a href="https://blockworks.co/news/hong-kong-za-bank-crypto" target="_blank" rel="noreferrer noopener">largest digital bank</a> earlier this month announced plans to service locally-regulated crypto exchanges with fiat on- and off-ramps. 



Hong Kong’s High Court also recently <a href="https://blockworks.co/news/crypto-property-hong-kong" target="_blank" rel="noreferrer noopener">deemed crypto to be property</a> in a landmark ruling, bringing clarity on certain legal aspects moving forward.



Local regulators, however, still restrict the types of digital asset funds allowed to operate. “For example, it is unclear whether the SFC would grant a license to a manager who manages VC funds that directly invest in blockchain projects that receive returns in newly minted tokens or virtual assets,” Wong said.



In any case, regulatory developments in Hong Kong appear positive at a time when the US, by contrast, is <a href="https://blockworks.co/news/warren-crypto-bill-delayed" target="_blank" rel="noreferrer noopener">still navigating regulations</a> for its local crypto economy.



“The Hong Kong government is living up its pledge to open up the virtual asset industry to provide Hong Kong with a competitive edge as a virtual asset hub in the Asia region,” Wong said.



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Hong Kong Has ‘Around 10’ Fund Managers Gone Crypto — But More Are Expected

Casey Wagner

Digital asset investment products clocked their fourth straight week of inflows last week, with $76 million pouring into the asset class, according to data from CoinShares.&nbsp;



Year-to-date inflows for crypto investment vehicles now total $230 million, “highlighting a decisive change in investor sentiment,” James Butterfill, head of research at CoinShares, wrote in a <a href="https://blog.coinshares.com/volume-117-digital-asset-fund-flows-weekly-report-f9cda81d18a4" target="_blank" rel="noreferrer noopener">report</a> released Monday. Total investment assets under management in the crypto space have increased nearly 40% since the start of the year, according to Butterfill. 



Bitcoin was the most popular asset, making up 90% of total flows for the week, as investors put $69 million into bitcoin products. Ether, by contrast, which is up more than 35% since the start of the year, saw $700,000 in inflows last week.&nbsp;



The moves come amid a busy week for macroeconomic news as traders took in US jobs data, the Federal Reserve interest rate decision and other central bank moves last week. The Fed’s decision to opt for a <a href="https://blockworks.co/news/federal-reserve-raises-interest-rates-25-bps">25 basis point increase</a> calmed markets initially, but more hawkish remarks from central bank head Chair Jerome Powell spooked investors.&nbsp;



“While there were some promising aspects of the jobs report — cooling wage growth and higher participation — it&#8217;s impossible to ignore the fact that the labor market remains red hot,” Craig Erlam, senior market analyst at Oanda, said. “For now, it&#8217;s hard to argue that the easier policy move for the Fed is to keep hiking in 25 basis point increments.”



Crypto was trading relatively flat Monday, with bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) down around 0.2% and ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) moving into the green with a 0.3% gain. Equities struggled to keep the momentum growing, with the S&amp;P 500 and Nasdaq Composite indexes posting 0.6% and 0.7% losses, respectively, as of 11 am ET. 



Overall, a shift into risk-off sentiment in the coming weeks ahead of the Fed’s next policy-setting meeting in March should not come as a surprise, analysts said.&nbsp;



“No doubt the Fed will worry about tipping the economy over into a recession that then spirals out of control, but no doubt it is also counting on being able to drop rates fast should unemployment start to move,” Noelle Acheson, editor of Crypto is Macro Now and former head of market insights at Genesis, wrote in a <a href="https://noelleacheson.substack.com/p/monday-feb-6-2023?utm_source=substack&amp;utm_medium=email" target="_blank" rel="noreferrer noopener">note</a> Monday.



“The market is counting on that, too, and indeed seems to have been pricing that in,” she said.



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Risk-off Sentiment Incoming, but Crypto Investment Products Aren’t Listening

Net flows into digital asset investment products in 2022 hit their lowest levels since 2018, though the total remained positive despite steep declines in crypto prices.



Inflows into crypto products were $433 million last year — down from $9.1 billion in 2021 and $6.6 billion in 2020, according to CoinShares. The 2022 flow total was nearly double the level seen during a tumultuous 2018, a bear market year that saw $233 million enter digital asset products.&nbsp;



Though total weekly outflows at one point reached 1.8% of total assets under management in 2018, outflows in 2022 never rose above 0.7% of total assets in the space.



“In a year where bitcoin prices fell by 63%, a clear bear market precipitated by irrational exuberance and an overly hawkish Fed, it is encouraging to see investors on the whole still choosing to invest, and in many cases tactically adding to positions during price weakness,” CoinShares Head of Research James Butterfill said in <a href="https://blog.coinshares.com/volume-112-digital-asset-fund-flows-weekly-report-e00679d7fea6" target="_blank" rel="noreferrer noopener">a Wednesday blog post</a>.



Bitcoin and multi-asset investment products notched inflows of $287 million and $209 million in 2022, respectively.&nbsp;



The SEC has yet to approve a spot bitcoin ETF in the US. Industry participants <a href="https://blockworks.co/news/crypto-chaos-dims-prospects-of-us-bitcoin-etf-analysts">said</a> in November the <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing">collapse</a> of crypto exchange FTX makes the chance of the regulator greenlighting one any time soon even more slim.&nbsp;



Products shorting crypto emerged during the year, gathering $108 million of net inflows. The ProShares Short Bitcoin Strategy ETF <a href="https://www.proshares.com/our-etfs/leveraged-and-inverse/biti" target="_blank" rel="noreferrer noopener">(BITI)</a>, which began trading in the US in June, has about $100 million in assets under management, according to ETF.com. Still, the category represents just 1.1% of total assets under management in bitcoin products.



<h3 class="wp-block-heading">Institutions expected to wait for Ethereum staking withdrawals</h3>



The largest outflows came from Ethereum products, which leaked $402 million. These negative flows came during a year in which the blockchain moved to a <a href="https://blockworks.co/news/ethereum-switches-to-proof-of-stake-after-7-years-of-work">proof-of-stake</a> consensus. 



Read more: <a href="http://blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/">Proof-of-Work vs. Proof-of-Stake: What’s the Difference?</a>



“Ethereum had a tumultuous year which we believe was due to investor concerns over a successful transition to proof of stake and continued issues over the timing of un-staking, which we believe will occur in Q2 2023,” Butterfill said.&nbsp;



Ethereum moving to proof of stake completely changes the investment case for ether, industry participants have <a href="https://blockworks.co/news/the-merge-completely-changes-ethers-investment-case-for-institutions">said</a>.&nbsp;



But some institutional investors are likely to wait for Ethereum’s Shanghai upgrade, which is expected to enable staking withdrawals.&nbsp;



Staked ether withdrawals are <a href="https://blockworks.co/news/ethereum-devs-still-want-staking-withdrawals-by-march-ish">expected</a> to come as soon as March.&nbsp;



Falling outside the scope of the report, ETFs investing in companies related to the crypto industry had a rough year.  



While several so-called <a href="https://blockworks.co/news/crypto-etfs-sank-in-2022">blockchain ETFs</a> beat the performance of bitcoin in 2022, plenty did not. As such funds are often tied to crypto prices, some industry watchers said, many of the offerings have an uncertain future.



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Crypto Fund Flows Dropped From $9.1B to $433M — But Beat 2018 Levels

As the year comes to a close, crypto investment product issuers are ending 2022 in a worse position than they started.&nbsp;



In 2022, digital asset investment vehicles lost more than 55% in assets under management (AUM) from their peak at the beginning of the year, according to data from research firm CryptoCompare.



“Due to the current state of panic in the market following the collapse of FTX, and rumors of similar problems at Binance, average weekly net outflows from digital asset investment products reached -$9.5 [million] in December, the highest level recorded since June 2022,” CryptoCompare analysts wrote in the report. 



AUM for crypto investment vehicles slightly recovered in December, with a 0.35% increase from November 2022. 



Investors continued to express the most interest in bitcoin and ether over the course of the year, with bitcoin investment products representing 69.7% of market share and ether products holding 25% of market share.&nbsp;



“Bitcoin and Ethereum product AUMs are currently down 61% and 62.1%, respectively, from their peaks in March and April 2022,” analysts added. Bitcoin and ether prices have dropped a similar amount.



Traders were also most interested in crypto investment products in the <a href="https://blockworks.co/news/how-many-crypto-etfs-is-too-many-some-industry-execs-say-weve-reached-our-limit" target="_blank" rel="noreferrer noopener">form of ETFs</a>, analysts noted. AUM represented by ETFs saw a rise of 5.96% to $1.78 billion in December 2022, representing 9.11% of the total market share. 



Similar to the broader spot market, <a href="https://blockworks.co/news/crypto-etfs-sank-in-2022" target="_blank" rel="noreferrer noopener">bitcoin futures ETFs are down over the year</a>. The ProShares Bitcoin Strategy ETF, which launched in October 2021, is down about 64% year to date. The Valkyrie Bitcoin Strategy ETF is down almost equally as much, losing 63% since January 2022. 



The 2022 end-of-year numbers for broader markets are skewed though, analysts point out, given the peak recorded across equity markets at the start of the year.



“By fluky coincidence, the all-time high in the S&amp;P 500 happened to be Jan. 3, the very first trading day of 2022,” Blockworks newsletter writer Byron Gilliam <a href="https://blockworks.co/newsletter/issue/30049653" target="_blank" rel="noreferrer noopener">wrote</a> earlier this month. 



“So the year-to-date performance in equities conveniently doubles as the high-to-low performance of the bear market. That’s never happened before and it makes all the YTD comparisons vs. history kind of meaningless: 2022 vs. any other calendar year is apples to oranges.”



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Crypto Investment Product AUM Down 55% in 2022

Crypto investment products saw the largest inflows in 14 weeks amid crypto market chaos fueled in part by <a href="https://cms.blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events/" target="_blank" rel="noreferrer noopener">the fall of crypto exchange FTX</a> and sister organization Alameda Research. 



The inflows of $42 million into crypto offerings last week began later in the week as extreme price weakness prompted by the demise of FTX and Alameda, according to CoinShares research head James Butterfill.&nbsp;



The spike came after weeks of relatively flat flows, which Butterfill had previously said signaled “apathy” from investors.


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="699" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg" alt="Weekly Crypto Asset Inflows Coinshares" class="wp-image-38749" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=377 377w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=383 383w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/CoinShares-data-1024x699.jpg?w=1492 1492w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure></div>


Bitcoin’s price was roughly $16,600 at 11 am ET Monday — down about 20% from seven days ago.&nbsp;



“It suggests that investors see this price weakness as an opportunity, differentiating between ‘trusted’ third parties and an inherently trustless system,” Butterfill said in <a href="https://blog.coinshares.com/volume-106-digital-asset-fund-flows-weekly-report-64ae996bffe6" target="_blank" rel="noreferrer noopener">a blog post</a> Monday.



Bitcoin investment products tallied $19 million of inflows last week, the largest since early August. Short bitcoin offerings also saw nearly $13 million in inflows, highlighting that some investors are “spooked,” Butterfill added.



ProShares’ bitcoin ETFs <a href="https://cms.blockworks.co/news/bitcoin-futures-and-short-etfs-record-huge-volume-spike-tuesday/" target="_blank" rel="noreferrer noopener">notched record trading volumes on Nov. 8</a> as crypto volatility ramped up, both before and after <a href="https://cms.blockworks.co/crypto-reacts-as-binance-on-brink-of-acquiring-ftx/">Binance revealed its</a><a href="https://cms.blockworks.co/crypto-reacts-as-binance-on-brink-of-acquiring-ftx/" target="_blank" rel="noreferrer noopener"> </a><a href="https://cms.blockworks.co/crypto-reacts-as-binance-on-brink-of-acquiring-ftx/">intention to buy rival exchange FTX</a> as it faced a “liquidity crunch.”&nbsp;



About 49 million shares of the ProShares Bitcoin Strategy ETF (BITO) traded that day, while shares traded of the ProShares Short Bitcoin Strategy ETF (BITI) totaled 7.2 million.



Binance tweeted on Nov. 9 that it decided not to pursue buying FTX, citing “news reports regarding mishandled customer funds and alleged US agency investigations.” FTX said on Nov. 11 that FTX founder Sam Bankman-Fried had resigned as the company’s CEO and that the exchange — and roughly 130 companies affiliated with FTX — <a href="https://cms.blockworks.co/news/ftx-ceo-bankman-fried-resigns-bankruptcy-proceedings-begin/" target="_blank" rel="noreferrer noopener">started voluntary bankruptcy proceedings</a>.



Reuters <a href="https://www.reuters.com/markets/currencies/exclusive-least-1-billion-client-funds-missing-failed-crypto-firm-ftx-sources-2022-11-12/">reported</a> Sunday that Bankman-Fried pulled up spreadsheets during a Nov. 7 meeting showing FTX had over time moved about $10 billion in client funds to Alameda Research. Between $1 billion and $2 billion of those funds were unaccounted for among Alameda’s remaining assets, according to the report.



&#8220;The recent crypto exchange turmoil has reinforced the potential benefits of obtaining bitcoin-linked exposure through the regulated, transparent futures market,” ProShares Global Investment Strategist Simeon Hyman told Blockworks in an email. “The record volume in BITI…and in BITO illustrates the strong demand from investors who wish to express bearish and bullish views on bitcoin.”



Blockchain equities investment products saw $32 million in outflows, its largest total since May. Meanwhile, multi-asset products had more than $8 million of inflows — its highest since June — which Butterfill said suggests investors see that segment as “a relative safe haven.”



Grayscale Investments’ Bitcoin Trust (GBTC) was trading at a larger discount than ever before last week, reaching nearly 42% on Nov. 10, according to <a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noreferrer noopener">YCharts</a> data. <a href="https://cms.blockworks.co/news/crypto-chaos-dims-prospects-of-us-bitcoin-etf-analysts/" target="_blank" rel="noreferrer noopener">Analysts told Blockworks</a> the slim chance of a US bitcoin ETF getting approved anytime soon likely got slimmer due to the events of last week.



Grayscale is currently entrenched in a lawsuit with the SEC as it seeks to overturn the regulator’s denial of its application to convert GBTC into an ETF.&nbsp;



“Now more than ever, American investors deserve safer, regulated ways to access bitcoin and the crypto ecosystem — and [GBTC] as an ETF would provide exactly this level of protection,” Grayscale Chief Legal Officer Craig Salm told Blockworks in an email. “As such, recent events&nbsp; — while unfortunate for the entire crypto ecosystem — should strengthen our case before the D.C. Circuit Court of Appeals.”



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What FUD? CoinShares Reports Largest Crypto Inflows in Months

<div id="highlights-block_630ce201c6f7a" class="highlights">
 <ul>
 <li>Outflows from bitcoin products are due in part to hawkish rhetoric from the Fed, CoinShares research head says</li>
 <li>Inflows into ether offerings cool as investors may wait for the Merge before adding to positions</li>
 </ul>
 
</div>



Trading volumes in crypto investment products last week hit their lowest levels since October 2020 as outflows in August continued, according to CoinShares data.&nbsp;



These offerings hit trading volumes of $901 million last week, substantially lower than the year-to-date weekly average, which stood at $2.4 billion as of Aug. 8.



Digital asset investment products also saw net outflows of $27 million last week, which was slightly higher than the $9 million in outflows from the week prior, the data shows.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="664" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg" alt="" class="wp-image-29476" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=396 396w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=403 403w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=338 338w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/Crypto-Asset-Flows-Week-ending-Aug.-26-1-1024x664.jpg?w=50 50w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



“While history indicates this is in part due to seasonal effects, we believe it also highlights continued apathy following recent price declines,” CoinShares Head of Research James Butterfill said in the crypto investment firm’s Monday report.&nbsp;&nbsp;&nbsp;



Bitcoin and ether were trading at roughly $20,170 and $1,510 at 11:00 am ET on Monday — each down about 7% in the past seven days.&nbsp;



Last week’s negative net flows were driven by $29 million in outflows from bitcoin products. Investment products focused on shorting bitcoin saw small inflows of about $1 million.



<blockquote class="wp-block-quote">“Both imply minimal but continued caution from investors which we believe is due to the ongoing hawkish rhetoric from the US Federal Reserve,” Butterfill added.&nbsp;</blockquote>



<a href="https://cms.blockworks.co/cryptos-equities-slide-as-traders-unpack-powells-jackson-hole-remarks/" target="_blank" rel="noreferrer noopener">Fed Chair Jerome Powell warned</a> during remarks on Friday at the Jackson Hole Economic Symposium that sustained price stability is still a long way off. Following Powell’s comments, some analysts said they predict another rate hike of 75 basis points in September. 



“The moment there are signs of a pivot from the Fed, we are likely to see much greater institutional investor participation,” Butterfill told Blockworks in an email.



Last week’s outflows marked the third consecutive week of negative flows for crypto investment products, amounting to $46 million over that span. That trend comes after net inflows into crypto investment products <a href="https://cms.blockworks.co/shaking-off-bears-investors-drive-years-biggest-crypto-inflows/" target="_blank" rel="noreferrer noopener">totaled $474 million in July</a> — the largest monthly total in 2022.&nbsp;



The influx of money into such offerings last month was partly driven by a reversal in ether products, which tallied flows of $138 million in July, compared to combined negative net flows of about $450 million in the prior six months.&nbsp;



Ether-focused products saw minor outflows of about $1 million last week. The number implies that, despite improving confidence due to <a href="https://cms.blockworks.co/tag/ethereum-merge" target="_blank" rel="noreferrer noopener">Ethereum’s upcoming Merge</a> next month, investors prefer to wait for the blockchain’s move from proof-of-work to proof-of-stake before adding to positions, Butterfill said.



“[The Merge] is likely to bring with it renewed confidence in Ethereum, as it ticks many of the boxes for investors looking to invest, particularly from an ESG perspective,” he told Blockworks. “If we are to see inflows and potential price appreciation towards the end of the year, it could well be led by Ethereum.”



Updated on Aug. 29, 2022 at 5:25 pm ET.



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Trading Volumes for Crypto Investment Products Hit 2-year Low

<div id="highlights-block_62b9d8fd7721c" class="highlights">
 <ul>
 <li>Assets in bitcoin-related offerings stand at $24.5 billion, the lowest since the beginning of 2021</li>
 <li>Purpose Investments accounted for $490 million of the bitcoin outflows last week</li>
 </ul>
 
</div>



Net outflows from bitcoin investment products totaled $453 million amid the ongoing crypto market sell-off, CoinShares revealed in the firm’s <a href="https://blog.coinshares.com/volume-86-digital-asset-fund-flows-weekly-report-10b238f6e1ef" target="_blank" rel="noreferrer noopener">weekly report</a>, erasing almost all year-to-date inflows in the category.&nbsp;



Assets under management in these bitcoin-related offerings stand at $24.5 billion, the lowest point since the beginning of 2021.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="680" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg" alt="" class="wp-image-23423" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=387 387w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=393 393w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=330 330w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Net-flows-by-asset-e1656352276362-1024x680.jpg?w=1386 1386w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Net flows by asset | Source: Bloomberg, CoinShares</figcaption></figure>



The outflows come as the price of bitcoin was $20,800 on Monday at noon ET — down about 27% from a month ago and down 70% from bitcoin’s all-time high last November.&nbsp;



Canadian fund provider Purpose Investments accounted for $490 million of bleeding, CoinShares data shows.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="580" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg" alt="" class="wp-image-23424" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=461 461w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=387 387w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/06/Flows-by-provider-1024x580.jpg?w=1424 1424w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Net flows by provider | Source: Bloomberg, CoinShares</figcaption></figure>



Purpose Investments launched the world’s first ETF backed by physically settled bitcoin in February 2021 on the Toronto Stock Exchange. <a href="https://www.purposeinvest.com/funds/purpose-bitcoin-etf" target="_blank" rel="noreferrer noopener">The fund</a>, which gathered $1 billion in assets during its first month, now has roughly $640 million in assets.



&#8220;The outflows from last week were larger than previous weeks, however it’s normal course of operations,” Vlad Tasevski, Purpose Investments’ chief operating officer and head of product, told Blockworks in an email. “In fact, the key highlight is that the ETF was able to process that large size of outflows without any issue and without impacting the market.”



Other investors seek returns by betting against crypto: Products that short bitcoin notched net inflows of $15 million due to the launch of the first such product <a href="https://cms.blockworks.co/proshares-to-launch-first-us-etf-thats-bearish-on-bitcoin/" target="_blank" rel="noreferrer noopener">launching in the US last week</a>. The ProShares Bitcoin Short Strategy ETF (BITI) — designed to deliver the inverse performance of the S&amp;P CME Bitcoin Futures Index — traded more than 870,000 shares, or $35 million of value, on its second day of trading.



The bitcoin-related outflows drove the $423 million in net outflows across the broader crypto market, which was the largest figure on record by a wide margin, CoinShares Head of Research James Butterfill wrote in a blog post. The previous record had been $198 million of outflows, set in January.



The total outflows from crypto-related products last week was the third largest in terms of its total relative to assets under management — representing 1.2% of assets. The crypto bear market of February 2018 resulted in a week in which outflows accounted for 1.6% of assets.



“Historically, massive outflows such as this have marked turning points in sentiment, although as in 2018&#8217;s case, the inflows were slow to recover,” Butterfill told Blockworks. “Interestingly, we have recently begun to see outflows in short-bitcoin investment products, suggesting investors are becoming less bearish.”



Outside of bitcoin-related investment vehicles, ether products had $11 million of inflows last week, breaking a streak of 11 straight weeks of outflows.



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Bitcoin Investment Products Endured $453M of Outflows Last Week

<div id="highlights-block_61f41033aea5a" class="highlights">
 <ul>
 <li>The firm, which manages $76 billion, is targeting a beta launch of the app during the second quarter</li>
 <li>&#8220;Being native to the blockchain will prove to be one of the great differentiating advantages,” WisdomTree CEO says</li>
 </ul>
 
</div>



ETF specialist WisdomTree has revealed plans to launch a blockchain-native financial services mobile app later this year as it looks to expand its presence in the digital assets space.



Called WisdomTree Prime, the app is designed to offer decentralized finance (DeFi) attributes, such as choice, transparency and inclusivity, CEO Jonathan Steinberg said during a Friday earnings call.



It will allow users to save, spend and invest in cryptoassets such as bitcoin and ether, blockchain-enabled funds and tokenized versions of physical assets like gold, company executives said.



“It’s the convergence of blockchain technology with universal smartphone ownership and tokenization with smart contracts that will effectively blur the lines between savings, payments and investments, fundamentally changing the way consumers view and interact with their own money and assets,” Steinberg said.



WisdomTree, which has $76 billion of assets under management, is targeting a beta launch of the app in certain states during the second quarter, with a national rollout expected by the end of the year.&nbsp;&nbsp;



Steinberg noted the efficiencies and enhancements that blockchain technology offers, such as near-instant transfers and automation. He compared the emerging space to the ETF industry 25 years ago, but called it a larger opportunity.



“Many have created these mobile apps but are using the old rails, so they’re not native to the blockchain,” the CEO said. “I can’t stress enough that starting now, being native to the blockchain will prove to be one of the great differentiating advantages.”&nbsp;&nbsp;&nbsp;



<h3 class="wp-block-heading">Recent product expansion</h3>



The upcoming app launch follows WisdomTree’s crypto product expansion in recent months.&nbsp;



The company in November <a href="https://cms.blockworks.co/wisdomtree-launches-spot-etps-in-europe/">added</a> three physically backed cryptocurrency basket exchange-traded products (ETPs) to its lineup of offerings in Europe.&nbsp;



WisdomTree Global Chief Investment Officer Jeremy Schwartz said Friday that the firm has a “strong pipeline” for additional crypto ETPs in the region. In the US, he added, separately managed accounts and direct indexing are currently the best ways for advisors to give their clients crypto exposure.



The firm <a href="https://cms.blockworks.co/wisdomtree-and-ritholtz-wealth-management-launch-crypto-index/">began offering a crypto index</a> that it created with Ritholtz Wealth Management in December.&nbsp;



WisdomTree, which has 75 ETFs trading in the US with roughly $47 billion of assets, also recently began providing <a href="https://cms.blockworks.co/which-mutual-funds-etfs-are-making-crypto-related-investments/">exposure to bitcoin futures contracts</a> within actively managed commodity and managed futures strategies.&nbsp;



The company <a href="https://cms.blockworks.co/wisdomtree-amends-bitcoin-etf-application/">amended its application</a> for an ETF in December that would invest directly in bitcoin a week after the US Securities and Exchange Commission (SEC) rejected its proposal.



“We have no guidance on when [that] might be approved,” Will Peck, WisdomTree’s head of digital assets, said during the earnings call. “But we’re very optimistic that ultimately spot ETFs will be approved here in the US for bitcoin and ether.”



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WisdomTree to Launch Digital Assets Consumer App

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
 <ul>
 <li>Digital asset investment products saw first week of outflows in over 4 months</li>
 <li>Terra becomes the second largest layer-1 chain when measured by TVL</li>
 </ul>
 
</div>



Digital asset investment products saw first week of outflows in over four months, according to a CoinShares <a href="https://coinshares.com/research/digital-asset-fund-flows">report</a>.



Terra becomes the second largest layer-1 chain when measured by TVL, according to DeFi Llama.



Margined open interest on BTC is more heavily weighted towards stablecoin margined open interest, implying a healthier market structure.



<h3 class="wp-block-heading">Latest in Macro:</h3>



<ul><li>S&amp;P 500: 4,568, -1.14%</li><li>NASDAQ: 14,980, -1.24%</li><li>Gold: $1,789, -0.60%</li><li>WTI Crude Oil: $68.66, -3.10%</li><li>10-Year Treasury: 1.429%, +0.027%</li></ul>



<h3 class="wp-block-heading">Latest in Crypto:</h3>



<ul><li>BTC: $47,291, +0.91%</li><li>ETH: $3,943, +0.14%</li><li>ETH/BTC: 0.0833, -0.98%</li><li>BTC.D: 40.57%, +0.49%</li></ul>



<h3 class="wp-block-heading">Crypto investment products see outflows </h3>



Digital asset investment products saw outflows totaling US$142m for the week ending on December 17th, the first outflow following a 17 week run of inflows, according to CoinShares latest fund flows <a href="https://coinshares.com/research/digital-asset-fund-flows" target="_blank" rel="noreferrer noopener">report</a>. The largest previous outflow took place in June of 2021 where weekly outflows totaled $97 million. 



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="769" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png" alt="" class="wp-image-12976" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=342 342w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=347 347w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-2.47.55-PM-1024x769.png?w=1294 1294w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: CoinShares</figcaption></figure></div>



The <a href="https://coinshares.com/research/digital-asset-fund-flows" target="_blank" rel="noreferrer noopener">report notes</a> that while the outflows appear alarming at first glance, there are a few key factors to consider for better context:



<ul><li>The outflows come at a time when the Federal Reserve has signaled increased tapering of asset purchases and rate hikes in 2022, which has spurred outflows across all risk-on assets</li><li>Outflows only represent 0.23% of the total assets under management (AUM) versus the outflows seen in early 2018 at the start of the bear market, which were equal to 1.60% of AUM at the time.</li><li>Inflows peaked at $9.5 billion for 2021 versus the total inflows of $6.7 billion seen in 2020, marking a record year of inflows for digital asset investment products.</li></ul>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="932" height="648" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png" alt="" class="wp-image-12980" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=932 932w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=370 370w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=375 375w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=315 315w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.20.05-PM.png?w=80 80w" sizes="(max-width: 932px) 100vw, 932px" /><figcaption>Source: CoinShares</figcaption></figure>



Bitcoin products saw outflows equal to $89.2 million, which was enough to push month-to-date flows into negative territory.



Ethereum investment products saw record outflows last week, totaling $64 million according to the CoinShares <a href="https://medium.com/coinshares/volume-59-digital-asset-fund-flows-weekly-5a107746bc52" target="_blank" rel="noreferrer noopener">report</a>.



While the two blue-chip digital assets saw outflows from investment vehicles, Solana, Polkadot, Cardano, Ripple and others saw net inflows despite the volatility seen in the digital assets market over the past few weeks.



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="702" height="590" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png" alt="" class="wp-image-12981" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=702 702w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=306 306w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=311 311w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-3.26.51-PM.png?w=80 80w" sizes="(max-width: 702px) 100vw, 702px" /><figcaption>Source: CoinShares</figcaption></figure></div>



<h3 class="wp-block-heading">Terra (LUNA) climbs to number 2 chain by TVL</h3>



Terra (LUNA) ousted Binance Smart Chain (BSC) and Avalanche (AVAX) over the weekend to become the second largest layer-1 chain when measured by total value locked (TVL). Terra currently boasts $17.66 billion of TVL according to data from <a href="https://defillama.com/chains" target="_blank" rel="noreferrer noopener">DeFi Llama</a>. The large increase in TVL can be attributed to the liquidity bootstrapping phase for a new DEX on Terra, <a href="https://lockdrop.astroport.fi" target="_blank" rel="noreferrer noopener">Astroport</a>, that concluded over the weekend.



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg" alt="" class="wp-image-12983" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Terra-TVL-1024x576.jpg?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: DeFi Llama</figcaption></figure></div>



<h3 class="wp-block-heading">BTC note</h3>



The percentage of BTC supply held of centralized exchanges is hovering near 3-year lows, according to data from <a href="https://studio.glassnode.com/metrics?a=BTC&amp;category=Exchanges&amp;m=distribution.BalanceExchangesRelative&amp;modal=loginForm&amp;s=1517529508&amp;u=1639958400&amp;zoom=" target="_blank" rel="noreferrer noopener">Glassnode</a>.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png" alt="" class="wp-image-12984" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-percent-balance-on-exchanges-all-exchanges-2-1024x576.png?w=1800 1800w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode </figcaption></figure>



&#8220;There are two types of BTC derivatives: BTC/crypto margined and stablecoin/USD margined,&#8221; <a href="https://twitter.com/DylanLeClair_/status/1472996720669863944?s=20" target="_blank" rel="noreferrer noopener">wrote</a> on-chain analyst, Dylan LeClair. &#8220;BTC margined longs are unfavorable versus stablecoins during a market downturn because as asset prices fall traders using BTC as collateral are liquidated.&#8221; 



As seen in the below chart, stablecoin margined open interest is outpacing BTC/crypto margined open interest which is seen as a healthier market structure.



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="771" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png" alt="" class="wp-image-12985" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=341 341w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=346 346w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=291 291w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@DylanLeClair_-1024x771.png?w=1634 1634w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: @DylanLeClair_</figcaption></figure></div>



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="328" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png" alt="" class="wp-image-12986" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.21-PM-1024x328.png?w=1223 1223w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="287" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png" alt="" class="wp-image-12987" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-20-at-4.23.10-PM-1024x287.png?w=1196 1196w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



If you made it this far, thanks for reading! I am looking forward to catching up tomorrow.



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Digital Asset Investment Products See First Outflows in 17 Weeks: Markets Wrap

<div id="highlights-block_61a94c355533f" class="highlights">
 <ul>
 <li>Flourish Crypto allows RIAs to access the growing digital asset market </li>
 <li>The platform now offers ethereum in addition to bitcoin in response to growing demand for more tokens </li>
 </ul>
 
</div>



MassMutual’s investment platform Flourish Crypto has added ethereum to its suite of assets, giving registered investment advisors (RIAs) greater access to the digital asset market, the insurance giant announced Thursday.&nbsp;



Flourish started about three years ago as Flourish Cash, a management solution that now works with about 420 RIAs around the country and represents more than a trillion dollars in total end-client assets. Flourish Crypto <a href="https://cms.blockworks.co/massmutuals-flourish-crypto-to-give-rias-direct-bitcoin-exposure/" target="_blank" rel="noreferrer noopener">launched</a> in September 2021 first with bitcoin as RIAs continued to express interest in digital asset investment opportunities. 



<blockquote class="wp-block-quote">“We started speaking with advisors about a year ago, and the change in demand over the last year has just been staggering,” said Ben Cruikshank, head of Flourish. “Today, virtually every single firm we&#8217;re speaking with is saying ‘we would like bitcoin and we would like ethereum, and we would like your perspectives on what&#8217;s coming next.’ I just can&#8217;t underscore enough how radically That conversation has changed really in just six to 12 months.” </blockquote>



Flourish Crypto has onboarded dozens of RIAs with an average assets under management of around $1 billion. RIAs generally have a difficult time accessing the crypto market on behalf of their clients because tokens cannot be traded on traditional brokerage platforms. The Flourish product has filled a significant gap in the market, Cruikshank said.&nbsp;



“We watched as crypto became a multi-trillion dollar asset class, we watched as 10s and 10s of millions of Americans are opening accounts or buying and selling cryptocurrencies,” he said.&nbsp; “And largely, when we spoke to RIAs, they felt like they were completely just left on the sidelines — that this whole crypto world was just moving past them.”



Flourish Cash helped the Flourish team start to understand the RIA community and build a cryptocurrency platform that met their needs, Cruikshank said.&nbsp;



“It is built with the flexibility they need around trading, transfers, regulatory and compliance considerations and integrations, client support, you name it,” he said. “We kind of customized the crypto solution for the adviser world so that RIAs could access crypto so that they could bring it to the client so that they can eventually help millions of millions of new Americans get what is often their first exposure to crypto.” 



<h3 class="wp-block-heading">Regulatory uncertainty</h3>



As different regulatory bodies in the US <a href="https://cms.blockworks.co/gensler-says-centralized-regulation-is-path-for-crypto/" target="_blank" rel="noreferrer noopener">continue to grapple</a> with how to approach and oversee the digital asset space, compliance issues have been top of mind for many RIAs, Cruikshank said. The US Securities and Exchange Commission (SEC) is the primary regulator for the RIA community, but the SEC has been fairly unclear about what the guidelines are around digital assets. 



“As an advisor being regulated by the SEC directly, making sure what you&#8217;re doing is in the lines of what your regulators are comfortable with is really, really important,” Cruikshank said.&nbsp;



In response to the uncertain regulatory environment, Flourish partnered with <a href="https://www.globenewswire.com/Tracker?data=QUXoa5aEC0WHNIU-He3Jso7AyQWkfSEndoA0Hmpbs8bJbia-xuv9IWeOR3SaGFioCEDrycopxto2hjWS2uMbcfjpQQG9wkDABa1FbIDZD4I=" target="_blank" rel="noreferrer noopener">Perkins Coie LLP</a>, an international law firm specializing in the financial technology, blockchain and investment management space, on a whitepaper that discusses regulatory and compliance considerations for RIAs looking to engage with cryptocurrencies. 



“If you think back to all the reasons that advisors cannot adopt crypto today, uncertain regulatory and compliance landscape is often one of the top three things on the list,” Cruikshank said. “Fortunately, we think there is certainly a path forward.”



In terms of what is next for Flourish Crypto, it is difficult to predict which tokens or cryptocurrencies may be added to the Flourish Crypto suite in the future, Cruikshank said. The SEC has determined that neither bitcoin nor ethereum are considered “securities&#8221; for the purpose of federal securities laws, but it is unclear how other tokens may be classified in the future. 



“Until there&#8217;s more regulatory clarity, you&#8217;re not going to see advisors adopting things too far out on that spectrum,” Cruikshank said. “With regards to additional tokens or additional cryptocurrencies, it is a slow but steady and very careful and very regulatory-first type of expansion.”



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