Bitcoin, Cryptocurrencies Post Fifth Straight Week of Outflows

Bitcoin investment products and funds registered outflows for a fifth consecutive week, as investor sentiment remained cautious in the midst of increased global regulatory scrutiny, data from digital asset manager CoinShares showed on Monday.

Outflows from the world's most popular cryptocurrency totaled $33 million in the week ended August 6, compared with $19.7 million (roughly Rs. 150 crores) the previous week. But so far this year, Bitcoin inflows remained a robust $4.2 billion (roughly Rs. 31,260 crores). Bitcoin price in India stood at Rs.34.5 lakhs as of 10:30am IST on August 10.

Total crypto outflows, meanwhile, added up to nearly $26 million (roughly Rs. 190 crores), although CoinShares noted that the magnitude of outflows was much less than in May and June.

Sluggishness in the crypto market was due in part to global regulatory crackdown, analysts say.

"There's all this focus on crypto because with all the new financial products and innovative solutions, governments, which are here to protect investors, are going to wonder whether this is a good idea and so, they're going to look more into these," said Matthijs de Vries, chief technology officer at infrastructure provider AllianceBlock.

Bitcoin on Monday hit an 11-week high above $46,000 (roughly Rs. 34.2 lakhs). Since mid-July, Bitcoin has gained 46 percent against the dollar.

Data also showed that Ether, the token used in the Ethereum blockchain, also saw outflows of $2.8 million (roughly Rs. 20 crores), from a nearly $9-million (roughly Rs. 65 crores) outflow the previous week. Ethereum price in India stood at Rs. 2.35 lakhs as of 10:30am IST on August 10.

Last Thursday, Ethereum, the second-largest blockchain network, went through a major software upgrade, which is expected to stabilise transaction fees and reduce supply of the Ether token.

Ether's supply is being reduced through "burning," in which tokens are sent to specialised addresses that have unobtainable private keys. Without access to a private key, no one can use the tokens, putting them outside the circulating supply.

About $59.2 million (roughly Rs. 440 crores) worth of ether tokens have been "burned" since Thursday's software upgrade, according to ultrasound.money, a website that tracks ether burning and supply.

Investors expect ether to accelerate gains as the Ethereum network burns more of its tokens. Ether was last up 4.9 percent at $3,161.93 (roughly Rs. 2.3 lakhs).

© Thomson Reuters 2021