Digital asset market faces headwinds amid persistent outflows, market uncertainty
Digital asset investment products have seen a total outflow of $272 million for six consecutive weeks, according to a May 30 report. report From CoinShares. This negative sentiment reflects broader market dynamics, with investment products being more active than the digital asset sector as a whole.
The report highlighted that bitcoin has fallen $11 million and remains the center of outflows. Short bitcoins dropped even more dramatically, accounting for 36% of total assets under management (AuM).
Altcoins, which were previously insulated from negative sentiment, also faced outflows, with Algorand seeing a 65% drop in assets under management and Ethereum experiencing a $5.9 million outflow). At the same time, blockchain stocks saw a small outflow totaling $3.4 million.
Broader market issues support the outflow.
The futures contract market was also affected, with volume dropping to its second-lowest level this year, reaching 767,000 BTC, or about $20 billion.
Binance, which holds about 66% of futures trading volume contracts, has lost about $10 billion in volume over the past 24 hours. Bitcoin’s realized price has hit a high of $20,180, likely affected by the debt ceiling decision and the liquidation of $118 million worth.
Despite facing options expiry pressure, Bitcoin and Ethereum showed resilience on May 26, with more than $2.2 billion worth of Bitcoin options expiring, after which the price recovered more than 5%. bottom.
Ethereum also witnessed a significant option expiry with a notional value of $1.3 billion. The market expects the notional value of options expiring in June to rise significantly above $3 billion, with a maximum pain price of $24,000.
Digital asset markets are facing headwinds, especially as the outflow of Bitcoin and some altcoins continues. This negative sentiment is influenced by various market factors such as futures contract declines and expected rate hikes.
Broader markets and macroeconomic issues
Additionally, the wider market landscape at present may have ripple effects on crypto as the crypto market has not yet fully decoupled from traditional assets. For example, the S&P 500 and Nasdaq Composite have experienced significant gains in 2023, largely driven by tech stocks.
However, the market cap of all other S&P 500 companies is down 3%, while Bitcoin is up 68% and Ethereum is up 60%. Market expectations for a 25 basis point interest rate hike in June are high as the PCE inflation rate exceeded expectations. It is important to remember that Bitcoin has never faced fiat inflation of this magnitude before.
Furthermore, if a potential recession or depression were to occur, it would be a new experience for Bitcoin, emphasizing the need to understand the relationship between traditional finance and cryptocurrencies.
After all, in recent weeks digital assets have shown resilience in the face of option expiry pressures, sustained outflows and rising inflation, indicating the potential for future recovery.
