Cryptocurrency flows will be negative, continued headwinds likely

After strong approaches the previous week, the inflow of cryptocurrencies turned negative last week, bringing total assets under management to their lowest levels since July 2021. In addition, both the on-chain signals and the cryptocurrency derivatives market paint a bleak picture for the near future. future.

According to the crypto investment and analysis firm Coin shares Crypto-mutual funds lost a total of $ 141 million in capital last week, a significant drop from the $ 274 million added the previous week.

The outflow in the past week has mostly affected Bitcoin (BTC) -supported funds, which have experienced outflows of nearly $ 154 million. Other funds with stand-alone assets experienced little change during the week, with Ethereum funds (ETH) losing $ 0.3 million. and Solana funds (SOL) won $ 0.5 million.

A notable exception, however, are the so-called multi-asset funds, ie funds backed by two or more cryptocurrencies. These funds experienced $ 9.7 million in inflows, with CoinShares indicating that investors see these funds as “safer versus single-track investment products” in times of volatility.

Source: CoinShares

The analysts of Genesis Global Trading stated in a note quoted by Bloomberg that BTC is likely to remain in its current range of $ 29,000- $ 31,000 “in the next few weeks.”

Others, however, suggested that more downward volatility should be expected before the market returns.

If S&P falls further, it should trigger one last wave and be a great buying opportunity for Bitcoin. There’s a lot of bear market and we should be close to a point where you really want to buy in that direction over the next few months, “said technical strategist Mark Newton Fundstrat Global Advisors quoted in the same report.

Meanwhile, the crypto exchange said bybit and the research company nansen in their May State-of-the-Industry report that a “short-term recovery” in the crypto market is unlikely given the percentage of stable coins in wallets that rose in April and May after falling in March.

“[…] the percentage of stack coins held by wallets has actually risen relative to the declining percentage in March, “the report said, adding that the decline in March” was a precursor to a strong jump in the broader cryptocurrency market. “

In addition, the report also said it saw an increase in activity on the Bitcoin network since March. The increase may be due to several large technology companies exploring the Bitcoin Lightning Network, the report speculated, noting that a similar increase in network activity was also seen at Polygon (MATIC) and Solana.

Avalanche (AVAX), on the other hand, experienced a significant decline in on-chain activity as “much of the on-chain activity has moved to the subnets,” according to the report.

Finally, the cryptanalysis firm wrote glass node in its weekly newsletter Monday that BTC has now traded lower for eight consecutive weeks, marking the “longest unbroken series of weekly red candlesticks in history.”

Glassnode added that cryptocurrency derivatives, including implicit volatility (IV) of BTC options, indicate that another downtrend remains to be feared over the next three to six months. In addition, on-chain signals also look weaker, as there is less demand for blockspace on both the Bitcoin and Ethereum networks.

Given these factors, “the demand side is likely to continue to face headwinds,” Glassnode concluded.

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