Rising Stars: XRP and Cardano Outshine Bitcoin Amid Investment Product Outflows

Bombolo | News and Media

In a recent twist, cryptocurrency investment products have experienced a surprising trend, with long-Bitcoin investment products witnessing significant outflows, while short Bitcoin products continue to face the same for the 14th consecutive week. This report from CoinShares sheds light on the growing preference of institutional investors for altcoins, except Ethereum, which stands as an exception to this trend. Notably, investments in XRP and Cardano (ADA) have been attracting substantial inflows in the past week.

Also Read: Ripple's XRP Emerges as the Leading Altcoin of 2023 After SEC Victory

Altcoin Surge and Bitcoin's Decline

The latest Digital Asset Fund Flows report by CoinShares reveals that institutional investors have displayed a shift in interest towards altcoins over the past week. Altcoin-focused products saw inflows of $3 million, and over the past eight weeks, the figure surged to $19 million. While Ethereum experienced an outflow of $1.9 million, Cardano, Solana, and XRP-based funds gained notable inflows of $640,000, $600,000, and $500,000, respectively.

Market-wide Pullback and Reduced Trading Volumes

The broader digital asset investment product market faced a slight pullback, witnessing minor outflows totaling $21 million. Concurrently, trading volumes for digital asset investment products plummeted to $915 million, marking a significant drop from the weekly average of $1.5 billion observed throughout the year.

This decrease in trading volumes mirrors the broader Bitcoin market, which saw a total of $16 billion traded on reliable exchanges, considerably lower than the year-to-date weekly average of $52 billion.

Also Read: XRP's Trading : 2 Million XRP Traded Every Minute, Could It Surpass Bitcoin?

Inflows in the First Half of the Year

Despite the subdued market activity, digital assets managed to attract nearly $500 million in inflows during the first half of the year. North America, however, experienced negative sentiment, witnessing $11 billion in outflows, making it the epicenter of the downturn in investor confidence.

Ruling Impact on XRP and ADA

Investment products focused on XRP and ADA experienced increased inflows due to a recent ruling by a federal judge, which deemed XRP not necessarily a security, leading to its relisting on several major exchanges. CCData's report shows a 33.2% rise in inflows for XRP-focused products, bringing their assets under management to $65.7 million. Additionally, the number of XRP holders with at least one million tokens surpassed 1,900, as investors responded positively to the uptick in sentiment.

Cardano's ADA also benefited from the same ruling, as it was declared a security in recent lawsuits filed by the U.S. Securities and Exchange Commission against leading cryptocurrency exchanges Binance and Coinbase. Furthermore, Cardano received recognition for its ESG score, as mentioned in CCData's ESG Benchmark report, where it secured a prominent position alongside Ethereum, SOL, and ADA.

Institutional investors' preference for altcoins over Bitcoin has been evident in recent weeks, with XRP and ADA attracting substantial inflows. The shift in sentiment can be attributed to various factors, including regulatory rulings and increasing interest in environmentally friendly cryptocurrencies. While Bitcoin's dominance remains unparalleled, altcoins continue to carve their niche in the dynamic world of digital assets.

Also Read: Bitcoin's Journey to $180,000 Before April 2024 with the BlackRock ETF

FAQs

1. Why did Bitcoin experience significant outflows in recent weeks?
   Bitcoin faced outflows as institutional investors shifted their focus towards altcoins, seeking potential growth opportunities beyond the traditional cryptocurrency leader.
2. What prompted the surge in inflows for XRP and ADA?
   The inflows were influenced by a recent ruling that deemed XRP not necessarily a security, as well as Cardano's recognition for its ESG score.
3. How did Ethereum perform amid the market trends?
   Ethereum experienced an outflow of $1.9 million, which set it apart from the general trend of altcoin inflows.
4. What is the significance of North America witnessing negative sentiment?
   North America's $11 billion outflows highlight a cautious approach among investors in the region, impacting the overall market sentiment.
5. Which cryptocurrencies were mentioned in CCData's ESG Benchmark report?
   Ethereum, SOL, and ADA were among the top cryptocurrencies recognized for their strong ESG scores.