By Gertrude Chavez-Dreyfuss
NEWYORK (Reuters) – Bitcoin hit record outflows last week, as investors diversified into cryptocurrency assets with new developments in their specific network such as ethereum, data from digital currency manager CoinShares showed on Monday.
Outflows for bitcoin products and funds totaled $98 million, or 0.2% of total assets under management. For the year, total bitcoin inflows amounted to $4.3 billion. In 2020, investors pumped $15.6 billion into bitcoin products and funds, while ethereum inflows reached nearly $2.5 billion, data showed.
Since hitting a record just under $65,000 in mid-April, bitcoin’s price has fallen 35%. Bitcoin was down 5.2% at $44,073, driven by tweets from Tesla Inc. chief Elon Musk.
“While it only represented 0.2% of AUM, last week’s largest-ever outflows from bitcoin investment products is noteworthy,” said Matt Weller, global head of market research at Forex.com.
“Bitcoin’s perceived environmental costs are becoming a bigger and bigger part of the narrative, boosting the relative appeal of ethereum and its upcoming transition to the less energy-intense proof-of-stake security model,” he added.
Ethereum, the second-largest cryptocurrency in terms of market capitalization, continued to post solid inflows of $26.5 million last week, with a total of $910 million so far this year.
The cryptocurrency has been bolstered by the surge in usage of ethereum-based decentralized finance applications, which facilitate crypto-denominated lending outside traditional banking.
Ethereum hit a record high of $4,380.64 last week but was last down 6.3% at $3,358. It has gained about 355% in 2021.
All other digital asset investment products saw inflows as well in the latest week, such as Cardano and Polkadot.
Grayscale remains the largest digital currency manager, with $47.268 billion in assets, down from $49.3 billion at the end of April.
CoinShares, the second-biggest and largest European digital asset manager, oversaw about $6 billion as of last week, up from $5.8 billion in late April.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Cynthia Osterman)