By
Benjamin Njiri
April 23rd, 2024
The SEC crackdown on the crypto space has dampened sentiments among institutional market players. Bitcoin-related investment products saw the highest outflows.
As we know, the US Securities and Exchange Commission (SEC) has tightened its grip on the crypto market since the beginning of 2023. The latest crackdown among the SEC major ones is shutting down the crypto staking service of crypto exchange Kraken.
SEC Crackdown on Crypto
The latest report from CoinShares notes that in the wake of the regulatory crackdown currently in the US, institutional investors have been refraining from further participation in the market. In fact, last week, the digital asset investment products saw the largest weekly outflows in 2023 so far.
In their report on Monday, February 20, CoinShares noted that digital asset investment products witnessed a total of $32 million in outflows last week. The official report reads:
“Digital asset investment products saw outflows totalling US$32m last week, the largest since late December 2022. Mid-way through last week the outflows were much higher at US$62m, but sentiment improved by Friday.”
These outflows come amid the major crackdown by the SEC in the crypto space over the last few weeks. The SEC has been targeting different businesses in the crypto space such as crypto staking, crypto custody, and stablecoins.
Major Outflows in Bitcoin-related Products
In its report, CoinShares noted that a majority of the outflows were in Bitcoin-related products. A staggering 78% of the total outflows are from Bitcoin-related investment products. On the other hand, there was an inflow of $3.7 million to Bitcoin short funds.
CoinShares Head of Research, James Butterfield noted: “We believe this is due to ETP investors being less optimistic on recent regulatory pressures in the US relative to the broader market.”
In the altcoin space, the negative institutional sentiment remained divided. Ethereum, Cosmos, Polygon, and Avalanche saw outflows of US$7.2m, US$1.6m, US$0.8m, and US$0.5m respectively. On the other hand, Aave, Fantom, XRP, BNB, and Decentraland all saw inflows between US$0.36m – US$0.26m.
Although institutional confidence in crypto is dwindling with the SEC action, last week, the crypto market witnessed a strong recovery with Bitcoin (BTC) heading all the way up to $25,000. The broader cryptocurrency market added more than $100 billion while moving past $1.13 trillion. Bitcoin along with other altcoins performed really well last week thereby alleviating some of the market fears.