Bitcoin, Ethereum Funds Post Second Lowest Weekly Trading Volume This Year: Report

Trading volume among institutional investors for crypto funds fell to $1 billion last week, the second lowest all year, according to a report from crypto asset manager CoinShares.

Trading activity has been low for some time now. Volumes have been just over $1 billion for each of the past three weeks. That’s a 55% drop from the average trading volume for the year, and last week’s drop to $1 billion makes it the second-worst weekly trading week so far this year, according to CoinShares.

The report notes that by the end of last week, Bitcoin exchange-traded products, or ETPs, had net outflows of $15 million. That makes it the third week in a row that investors pulled more money out of Bitcoin funds than they deposited. The first week of August, Bitcoin products had net outflows of $9 million, and the week before short Bitcoin products, which bet against the cryptocurrency, saw outflows of $3 million.

On Monday morning, BTC was trading at just over $20,000, according to CoinMarketCap, down 7% from last week.

The price of Bitcoin fell below $20,000 last week, falling as low as $19,600.79 on Friday, following bearish remarks by Federal Reserve Chairman Jerome Powell on raise the interest rate again to counter inflation. As of July, the U.S. inflation rate was 8.5%, having risen a full percentage point since the start of the year and up from 5.4% at the same time last year, according to US Bureau of Labor Statistics.

There are signs that interest has also been falling among retailers, according to a report last week from Glassnode. The crypto analytics firm wrote that while Bitcoin’s price experienced a moderate increase last week, trading volume for transactions of $1,000 or less — which Glassnode attributes to retail traders — was steadily falling.

“This pattern provides further confirmation of the underlying weakness of this market rally,” Glassnode wrote in its report.

The institutional investor crash appears to have affected all crypto ETPs, according to CoinShares head of research James Butterfill.

“It is worth noting that volumes remain very low in investment products and stood at $901 million last week, the lowest since October 2020,” he wrote in the report. “While history indicates this is partly due to seasonal effects, we believe it also highlights continued apathy following the latest price decline.”

The one bright spot, while not overwhelming, has been Ethereum. The second largest cryptocurrency by market capitalization ($184 million as of Monday morning) had net inflows totaling $3 million last week.

Last week, the Ethereum Foundation, the non-profit organization that supports the Ethereum network, confirmed that the Ethereum merger will be completed between September 10th and 20th. The merger refers to a major protocol upgrade that will combine Ethereum. the main network with proof-of-stake beacon chain.

That means the network will switch from a proof-of-work system that supports mining to a proof-of-stake system that will instead support staking, which involves pledging pre-existing assets to the blockchain to validate transactions and secure the network. Although many developers have predicted dates, it was the first time that the foundation itself became specific about when the switch will take place.

“The successful upgrade of all public test net is now complete and The Merge is planned for the Ethereum network,” the foundation wrote in a blog post last week.

That said, even “fusion wave” may decline. The price of Ethereum has fallen 6.5% in the past week.