The cryptocurrency market has faced significant challenges this year, with institutional investors increasingly pulling out. However, while this trend has affected various assets, Ethereum has been hit particularly hard. The outflows from Ethereum have led to a decline in total assets under management (AuM), highlighting a growing aversion from institutional investors toward the cryptocurrency.
Ethereum’s struggle began when it fell below the crucial support level of $1,600. In its Digital Asset Fund Flows Weekly Report, CoinShares, an alternative asset manager, underscored the declining interest in Ethereum among institutional investors. The report revealed substantial outflows that have caused Ethereum’s asset under management to decline at a faster rate compared to other cryptocurrencies.
These outflows have persisted over several months, with the latest figures indicating a total of $4.8 million leaving Ethereum funds. Since the beginning of the year, the outflows have reached $108 million, accounting for 1.6% of Ethereum’s total assets under management. This is the largest percentage of outflows among all crypto assets, signaling a clear lack of enthusiasm from institutional investors.
Interestingly, while Ethereum has faced significant outflows, altcoins such as XRP have seen inflows of $0.7 million as investors diverted their funds away from Ethereum. CoinShares labeled Ethereum as “the least loved digital asset amongst ETP investors this year.”
While Ethereum has experienced the highest outflows, it is not the only cryptocurrency to suffer from institutional withdrawals. Bitcoin, the largest cryptocurrency by market capitalization, saw $69 million leave Bitcoin funds, indicating a lack of confidence among institutional investors. In contrast, short Bitcoin funds experienced their highest weekly inflow in five months, with $15 million being invested.
Furthermore, blockchain equities have also faced outflows, totaling $10.8 million. In total, the outflows from crypto and blockchain-related funds have reached $294 million, accounting for 0.9% of the total assets under management. This bearish sentiment among institutional investors is evident in the sharp decline in trading volumes, which dropped by 73% compared to the previous week.
Despite the recent negative sentiment, there are some positive signs for the top assets in the cryptocurrency market. Bitcoin and Ethereum have seen a significant increase in trading volumes on crypto exchanges this week, with jumps of 96.28% and 41.16%, respectively. These figures could indicate a potential reversal in the market after a challenging weekend.
Institutional investors have demonstrated a waning interest in Ethereum, leading to substantial outflows and a decline in the cryptocurrency’s assets under management. While Ethereum is labeled as the “least loved” digital asset among institutional investors, other cryptocurrencies like Bitcoin and altcoins have also experienced withdrawals. The bearish sentiment is further reflected in the decline in trading volumes. However, recent upticks in trading volumes for Bitcoin and Ethereum suggest a glimmer of hope for the market. Only time will tell how institutional investors will navigate the ever-changing cryptocurrency landscape.