Digital asset exchange-traded products and funds faced a significant setback last week, with a staggering $600 million in outflows reported, marking the highest outflows since March 22, as per a report released on June 17.
The latest CoinShares “Weekly Asset Fund Flows” report highlighted that the outflows were predominantly from Bitcoin (BTC) investment vehicles, witnessing a massive $621 million weekly outflow. Conversely, short Bitcoin funds received $1.8 million in weekly inflows.
The report attributed this capital flight from fixed-supply assets like Bitcoin to a more hawkish stance from the Federal Reserve, indicating a continuation of high interest rates.
Altcoins, on the other hand, showed resilience with positive performances last week. Ether (ETH) investment vehicles saw $13.2 million in inflows, while LIDO and XRP (XRP) investment products also attracted $2 million and $1.1 million in weekly inflows, respectively.
Additionally, BNB (BNB), Litecoin (LTC), Cardano (ADA), and Chainlink (LINK) investment products experienced modest weekly inflows.
However, despite the inflows into altcoins, the overall trend of outflows and sell-offs persisted, resulting in a decline in total digital assets under management from $100 billion to $94 billion within the week.
Institutional adoption of digital assets continues to lag behind, despite the excitement surrounding the launch of Bitcoin exchange-traded funds (ETFs) in the United States. Experts suggest that institutional adoption of digital assets is still in its early stages.
Marc Degen, co-founder of blockchain firm Trust Square, emphasized that corporate adoption of Bitcoin is still at an “amateur league” level. He compared the inflows of Bitcoin ETFs, which have accumulated between $60 billion and $70 billion, to the $100 billion total assets under management globally in June.
Degen further illustrated this point by contrasting the total digital asset fund inflows with the capital flows into JPMorgan, which saw $489 billion in net new client inflows in 2023. This comparison highlights the disparity between the traditional financial sector and the emerging digital asset ecosystem.
Franklin Templeton CEO Jenny Johnson echoed similar sentiments, stating that institutional adoption is in its early stages, with a second wave of robust institutional interest and capital deployment expected in the future.
The question of whether the NSA created Bitcoin remains a topic of discussion in the digital asset community.