Despite the price correction, digital asset funds ended the week with positive net outflows, totaling $308 million.
The December market correction had a significant impact on digital asset investment returns, with total assets under management of exchange-traded products (ETPs) falling to $17.7 billion.
Digital asset funds shed more than $1 billion between December 19 and 20, likely in response to the slowing down of liquidity in the coming year, according to a December 23 CoinShares analysis. On December 18, the U.S. Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points to 4.25% from 4.50%, the lowest level since February.
However, new estimates suggest a more cautious approach to future rate cuts, with only two 25 basis point cuts expected by 2025, down from four previously.
Despite the economic uncertainty and price corrections, digital asset funds ended the week with a net inflow of $308 million. CoinShares analysis notes that while “the outcome was quite impressive, it still only accounted for 0.37% of the total value of cryptocurrencies.”
ETP trading segment
Most of the inflows from last week were focused on foreign markets and commodity products. Between December 16 and 20, inflows from Germany, Sweden and Switzerland totaled $212 million, while the Canadian market saw inflows of $60 million.
On the positive side, the United States accounted for $567 million in inflows, followed by Brazil with $16 million and Australia with $10 million.
Bitcoin’s BTC price fell $95,745, driven by a week of inflows, which wiped out $375 million in liquidity, followed by a $3,359.18 drop in Ethereum’s ETH price, which resulted in $51 million in inflows. The multi-asset product saw negative outflows of $121.4 million, while Solana SOL shares fell to $189.08 with outflows of $8.7 million.
“Despite Bitcoin’s weekly losses, net outflows for the week still totaled $375 million, with little activity from Bitcoin short holders.”
The price of Bitcoin fell from $106,000 on December 16 to $93,370 on December 20, down 10.5% over the period. The cryptocurrency is currently up 115% at the time of writing.
