Crypto’s Six-Week Bleed Out: XRP And Solana Defy The Outflow Downtrend
With contrasting events in the industry, crypto investment products have witnessed a continuous outflow for the sixth week. Some altcoins demonstrate resilience in this trend, defying the broader market sentiment.
Dissecting The Crypto Outflow Trend
Crypto funds have witnessed a net outflow of $ 9 million in the past week, taking the total to roughly $ 464 million over the last ten weeks, according to Coinshares’ latest digital asset fund flow weekly report.
Relevant digital asset management players like CoinShares, Grayscale, 21Shares, Bitwise, and ProShares have felt the heat of this ongoing trend.
To put things into perspective, the outflows have cooled from the previous week’s $ 54 million, but they still extend the continuous ten-week streak of net capital movement away from these products.
A closer look into the report reveals this trend isn’t uniform across regions. Europe has somewhat resisted this wave, recording inflows of $ 16 million. James Butterfill, Research Head at CoinShares, pinpoints the regional sentiment divergence to varying reactions to the regulatory environment.
According to Butterfill, European investors see the “recent regulatory disappointment as an opportunity,” while their US counterparts have pulled out $ 14 million, possibly due to dismay over recent events.
Moreover, trading volumes in crypto funds have reflected the same caution. From exceeding $ 1 billion in the previous week, the volume plunged to $ 820 million, substantially less than the yearly average of $ 1.3 billion.
Not All Assets Feel The Pinch
Bitcoin, the flag bearer of crypto, hasn’t been immune to this trend, registering outflows for three consecutive weeks, with a dip of $ 6 million in the past week alone. Interestingly, Short-Bitcoin products, which gain when Bitcoin prices fall, have seen outflows of $ 2.8 million.
This suggests a larger narrative where investors may unwind their bearish bets on Bitcoin. According to Butterfill, this outflow signifies a reduction of 78% in those assets under management over the past 22 weeks.
Ethereum, another heavyweight in the crypto arena, has also felt the pinch, with outflows recorded for six weeks consecutively, resulting in a recent reduction of $ 2.2 million.
In contrast to the major players, XRP and Solana are bright spots in the market. This week, they registered inflows of $ 660,000 and $ 310,000, respectively. Interestingly, this isn’t the first time these two altcoins have shone amidst the gloom.
Last week, both assets witnessed significant inflows. Solana led the way with $ 700,000, followed by Cardano and XRP, which attracted inflows of $ 400,000 and $ 100,000, respectively.
While Cardano didn’t cut notable inflows this week, XRP and Solana’s positive inflows amid broader negativity suggest a selective and value-driven approach by some investors in the altcoin market, according to the report.
Meanwhile, despite their recorded upward capital movements, XRP and Solana still feel the brunt of the global crypto market downturn.
Particularly, both assets have been in red, with XRP down by 1.5% in the past day with a current price of $ 0.50 and Solana seeing a slight 0.5% upward move over the same period with a trading price of $ 19.60 at the time of writing.
Featured image from iStock, Chart from TradingView
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How An ‘Inconsequential’ Mistake Saw Bitcoin Crash To $8,000
Bitcoin is known to be a very volatile digital asset as its price is often wont to rise and fall unexpectedly, and sometimes without a clear reason. One of these instances of the digital asset flash-crashing was back in 2021 when the price of Bitcoin had fallen 87% on some exchanges in a matter of minutes. However, the mystery behind this flash crash has been unveiled two years after it first occurred.
Former Alameda Research Engineer Spills Secret
Alameda Research is the sister company of the now-defunct FTX crypto exchange run by Caroline Ellison who served as CEO until it collapsed. Following the bankruptcy, employees at the trading firm have, at various times, come forward to tell stories of what took place at the company. This time around, an ex-engineer Aditya Baradwaj is telling the story of how a simple mistake caused the company to lose tens of millions of dollars.
Baradwaj took to his X (formerly Twitter) account to reveal how an Alameda employee had unwittingly triggered a Bitcoin flash crash in 2021. According to him, the error was a result of two trading systems operated at the company.
PART 2: THE FAT-FINGER
or
The story of how a misplaced decimal point at Alameda Research caused a market crash that echoed around the world.
(1/n)
— Adi (e/acc) (@aditya_baradwaj) September 20, 2023
The ex-engineer explained that Alameda had semi-systemic strategies in which a complex automated trading system was controlled by model parameters set by traders. The second was manual trading which would be done when the former could not execute a trade due to a number of reasons.
In the case of the trader who triggered the flash crash, they had to manually enter a trade to sell a large tranche of BTC using Alameda’s manual trading system. However, the trader had failed to realize that the decimal point in the trade was off by a couple of spaces, which meant that they were selling the BTC at much lower prices than the current price.
The result of this simple error was Alameda selling off a sizable portion of BTC at pennies on the dollar which resulted in a flash crash on multiple exchanges. The crash was most prominent on the FTX and Binance exchanges, where prices fell from $ 65,000 to $ 8,000 in a matter of minutes.
Covering Up The Bitcoin Crash
The aftermath of the flash crash, according to the ex-engineer, involved Alameda rushing to put in place sanity checks that should have been available before any manual trades were executed. He notes that this was not out of the ordinary as they were always waiting for things to break before fixing them at the company.
“That’s usually how things worked at Alameda – we would wait until something broke, and then rush to fix it,” he said. Baradwaj also referred to FTX founder Sam Bankman-Fried saying that the utility gained after the events outweighed the costs incurred from poor risk checks and hacks.
He also pointed to Binance commenting on the flash crash with a statement that blamed a bug in the trading algorithm of one of their institutional traders. “I guess Caroline had made some phone calls,” Baradwaj said, referring to Alameda’s CEO.
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Glassnode Co-Founders Weigh In On Bitcoin (BTC) Path To $30,000
Bitcoin has had an eventful week, gaining by over 5% to trade above the $ 26,000 price. Even following the release of the US Consumer Price Index, which showed an inflation rise of 0.6%, the premier cryptocurrency remained resilient with little to no price drops.
As BTC now hovers around the $ 26,500 price mark, market analysts and crypto enthusiasts continue to speculate on the token’s next movement.
Notably, co-founders of market intelligence platform Glassnode Jan Happel and Yan Allemann have plotted a possible path through which Bitcoin may return to $ 30,000 in the coming weeks.
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Through a post on their shared account on X, known as Negentropic, the Glassnode co-founders stated that Bitcoin is currently targeting a move above $ 27,000, having reclaimed its support at $ 26,000 in the past week.
According to the analysts, the Bitcoin Risk Index has now dipped into the 60s, indicating there is an ongoing shift to a positive sentiment around the asset. This means that more investors are beginning to view Bitcoin as a favorable investment.
The US Consumer Price Index (CPI) jump by 0.6% was expected to stir the BTC price, and it has.
Reclaiming support above $ 26k, BTC's now eyeing a breakout past $ 27k, potentially exiting a multi-week range.
Risk Signal's nosedive into the 60s signifies this attitude shift. Profit… pic.twitter.com/BgrMq5Rb62
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) September 15, 2023
If these sentiments translate into buying pressure, Bitcoin could embark on an upward trend. However, the Glassnode co-founders predict the token will face significant resistance at $ 27,400 and $ 28,200, as traders could opt to take profit at these price levels.
However, the analysts predict BTC will eventually overcome these barriers, pushing through to the $ 30,000 price mark, which they described as a “psychology barrier.”
The last time Bitcoin traded above $ 30,000 was back in July. Since then, the world’s largest cryptocurrency has seen its price decline by over 17% due to multiple events, most notably, the massive Bitcoin sell-off by aerospace company Space X.
Is A Bitcoin Rally Coming?
In other news, data from Into The Block shows that Bitcoin’s transaction fees for this week were valued at $ 6.3 million, representing a 40% increase on the last week.
While a rise in transaction fees could represent network congestion, which is known to drive network users away, it could also mean there is a high level of adoption.
Furthermore, Into The Block also reported that Bitcoin recorded exchange inflows of $ 10 million and outflows of $ 70 million.
The high level of Bitcoin being moved off exchanges indicates rising investors’ interest in the cryptocurrency, which could also translate into a notable price gain.
However, it is worth stating that these are only predictions and should not be counted as investment advice.
At the time of writing, Bitcoin trades at $ $ 26,537 with a 0.33% loss in the last day based on data from CoinMarketCap. The token’s daily trading volume is also down 12.86% and valued at $ 11.25 billion.
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