Digital Assets: Ethereum Negative Sentiment leads to $50M Outflows, CoinShares Reports, As Morgan Stanley Bags 28K+ GBTC Shares

James Butterfill, Investment Strategist at London-based CoinShares, a digital asset manager focused on expanding access to the cryptocurrency ecosystem while serving as a “trusted partner” for its clients, notes in a blog post published on Monday (June 28) that for the week ending June 28, 2021, Ethereum “bears the brunt of the negative sentiment with record outflows of US$50m.”

Butterfill also notes that digital asset investment products recorded a fourth straight week of outflows totaling US$44m. Since mid-May 2021, as “negative sentiment has remained prevalent,” net weekly outflows “now total US$313m representing 0.8% of total assets under management (AuM),” the report added.

The CoinShares team also mentioned that this outflow, “on a relative basis, remains small in comparison to the negative sentiment in early 2018 where outflows as a percentage of AuM totalled 4.9%.”

The report further noted:

“This week most of the negative sentiment was focused on Ethereum where net outflows totalled US$50m, the largest on record. These outflows represent 5% of the US$943 inflows year-to-date. Bitcoin saw minor outflows totaling US$1.3m, its seventh consecutive week of outflows. Flows were varied across providers, with some seeing substantive outflows while others saw inflows, suggesting mixed sentiment for Bitcoin amongst investors.”

CoinShares’ report continued:

“Multi-digital asset investment products continued to buck the negative trend with inflows of US$6m last week, suggesting that investors continue to favour digital assets but are keen to diversify.”

As covered earlier this month, Ethereum recorded the largest outflows on record last week at $12.7M, as Bitcoin remained a popular choice, the CoinShares team had reported on June 14, 2021.

Butterfill had noted, earlier this month, that digital asset investment products saw a second straight week of outflows totaling $21 million (as reported by the firm on June 14). This had led to the aggregate weekly outflows since mid-May to $267 million, “representing 0.6% of total assets under management (AUM),” the CoinShares team noted on June 14.

Although sentiment has weakened, investors on the whole “remain committed given the magnitude of inflows seen this year which represent 13% of AUM or $5.8 billion, nearly matching the US$6.7bn for the whole of 2020,” the report from CoinShares had revealed earlier this month.

It’s worth noting that Morgan Stanley has acquired 28,289 shares of Grayscale Bitcoin Trust (GBTC) via its Europe Opportunity Fund, according to a US Securities and Exchange Commission (SEC) filing.

Morgan Stanley has become quite active in the digital assets space so that it can address the growing demand from customers. In April 2021, the company had permitted a few of its funds to make indirect investments in Bitcoin via cash-settled futures contracts as well as Grayscale’s Bitcoin Trust, which includes the Institutional Fund, Institutional Fund Trust, Insight Fund and Variable Insurance Fund.

Each fund has the option of investing around a quarter or 25% of their assets into BTC, the SEC filing confirmed. The Europe Opportunity Fund includes European firms operating in the tech and non-tech sectors, as well as other investments.

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