Trading volumes for Bitcoin exchange-traded funds (Bitcoin ETF) surged past $1 billion on August 5 amid a pronounced cryptocurrency market downturn, triggering heightened trading activity across digital assets.
According to Alex Thorn, head of research at asset manager Galaxy Digital, the “extremely elevated” trading volumes following the market drawdown were particularly pronounced in Bitcoin ETFs.
Elevated Trading Activity Boosted By Bitcoin ETF
Within just 20 minutes of trading on August 5, Bitcoin ETFs recorded over $1.3 billion in trading volume.
Thorn anticipates that these ETFs will see net inflows as investors seek to capitalize on a roughly 8% drop in spot Bitcoin prices since August 4.
Notably, the downturn was primarily led by Ethereum, which experienced a significant price decline of over 21% in the last 24 hours.
𝗝𝗨𝗦𝗧 𝗜𝗡: 🇺🇸 Bitcoin ETFs saw $2.3 billion in trading volume in the first 45 minutes of trading. pic. .com/UY60r1TZL7
— Wealth Mastery by Lark Davis (@WealthMastery_) August 5, 2024
This sharp drop was attributed to substantial Ether sales by major funds, including Jump Trading and Paradigm VC.
According to an August 5 report by QCP Group, Jump Trading alone has reportedly sold more than $377 million worth of ETH and may liquidate as much as $481 million in total.
However, the market turbulence has not been limited to Bitcoin and Ethereum.
Digital asset investment products saw outflows totaling $528 million last week, marking the first weekly decline in four weeks.
The outflows are believed to be a reaction to growing concerns over a potential recession in the United States, coupled with geopolitical uncertainties that have led to widespread liquidations across various asset classes.
Geographical Breakdown on Bitcoin ETPs and Market Sentiment
A report by CoinShares indicated that trading volumes in exchange-traded products (ETPs) reached $14.8 billion, representing 25% of the total market.
Following the close of markets on Friday, the digital asset market witnessed a correction, resulting in a substantial $10 billion drop in total ETP Assets under Management (AuM).
The bulk of the outflows were concentrated in the United States, with $531 million exiting the market.
Germany and Hong Kong also saw outflows, amounting to $12 million and $27 million, respectively.
In contrast, Canada and Switzerland took advantage of the price weaknesses, recording inflows of $17 million and $28 million, respectively.
Bitcoin and Ether are seeing huge inflows…$BTC hit $1.35B in weekly inflows, pushing it past $60K. $ETH saw $72.1M, driven by the upcoming US spot Ether ETF.
Most of the inflows came from the US, with contributions from Switzerland, Hong Kong, and Canada.#Bitcoin #Ethereum… pic. .com/oyJkGigbJt
— Sankalp Hashtalk (@HashtalkSankalp) July 15, 2024
Notably, Bitcoin experienced massive outflows totaling $400 million, a sharp reversal after five consecutive weeks of inflows.