Crypto Funds See Record Outflows, Bear Market Looms

The cryptocurrency market has experienced a significant downturn, with the total market cap falling over 10% in the past week due to widespread price corrections across digital assets. This decline has particularly impacted crypto investment funds, such as ETFs, as institutional investors have withdrawn substantial capital. According to XWIN Research Japan, these developments, among other factors, suggest the onset of a structural bear market, indicating a shift where investors are moving towards less risky and more stable investments.

XWIN Research Japan, a digital asset market analysis firm, posits that Bitcoin’s recent price losses signify a fundamental change in market trend rather than a mere correction, driven by systematic deleveraging. A key indicator is the netflows into crypto investment funds, which saw a record $2 billion decline last week, the largest since February. Since early November, cumulative withdrawals from these ETFs have reached $3.2 billion, with Bitcoin and Ethereum experiencing net outflows of $1.4 billion and $689 million, respectively. Furthermore, the Asset Under Management (AUM) for these funds has dropped 27% from its October peak, reinforcing the view of a bearish market structure.

Adding to this cautious outlook is the Coinbase Premium Gap, which has been negative for several weeks, mirroring a previous period (February to May) characterized by steady selling pressure from US institutions. Another crucial bear market signal highlighted by XWIN analysts is the Stablecoin Supply Ratio (SSR), which has plummeted to near-yearly lows. While a low SSR typically suggests higher buying power, XWIN clarifies that this instance is driven by a decrease in Bitcoin’s market cap rather than an increase in stablecoin supply. This indicates a lack of new liquidity and weak market buying power, pointing towards a potential sustained downtrend. A reversal, they suggest, hinges on a resurgence in stablecoin inflows, a normalized Coinbase premium, and increased ETF netflows.

(Source: https://bitcoinist.com/crypto-funds-record-outflows-bearish-market/)