Institutions Sold $726 Million of Crypto Last Week, Highest Since March

Starting in September, institutions dumped a whopping $726 million of crypto assets onto the open market, according to CoinShares’ latest Digital Asset Fund Flows report.

The figure is the second largest this year, following a massive weekly outflow in March of $942 million. Most of the crypto sold by large entities was BTC ($643 million) and ETH ($93 million), with inflows channeled mostly into Solana ($6.2 million) and XRP ($1 million).

According to James Butterfill, head of research at CoinShares, what’s notable is that volumes are up dramatically on trusted spot exchanges, trading an average of $20 billion a day last week, compared to US$8 billion daily year-to-date. He suspects that with the huge uncertainty over whether the Federal Reserve will cut interest rates by 25 or 50 basis points, “there is a lot of investor positioning.”

Butterfill added that Bitcoin theoretically should be an interest-sensitive asset, which is “exactly what we’re seeing.” He said that BTC has a -70% correlation to the USD, and when interest rate-sensitive macro data is released, you can see an immediate intraday reaction in prices.

“This is why we are looking so closely at FED policy in determining the potential price performance of Bitcoin,” he said.

Luke Nolan, assistant researcher for CoinShares, told The Defiant that September “is usually not such a great month for Bitcoin,” with average returns of -5%. Nolan did point out, however, that seasonality “is a weak reason” for an asset’s performance; so he doesn’t put much weight on this metric alone.

Nolan added that he wasn’t expecting the sell-off to be so significant and that he’s seeing a “slight growth scare across risk markets.”

Most of Ethereum’s outflows came from the incumbent Grayscale Ethereum Trust, which now holds $3.9 billion in ETH. Meanwhile, inflows for newly issued Ethereum ETF providers “have almost completely dried up,” Butterfill wrote.

Geographically, the U.S. was markedly bearish compared to its European counterparts, with outflows reaching $721 million and $28 million in Canada. European sentiment was more positive, with German and Swiss-based entities adding $16 million and $3 million, respectively.