As golfers gear-up for the 2023 Ryder Cup this weekend, crypto-specialising asset manager CoinShares has pitched its own DeFi spin on Europe versus USA antics.
Entitled ‘Volume 150: Digital Asset Fund Flows Weekly Report,’ the study outlines the divergence in investment patterns between crypto’s two largest hotspots over the past week and month.
Interestingly, the results suggest what we’ve already been learning about crypto developments across the two regions, as whilst Europe remains in somewhat of a limbo state (perhaps waiting for the USA to get its ass in gear), regulatory chaos across the pond has put a dampener on American crypto investments.
In acquiring these stats, Coinshares tracked investment inflows and outflows from a variety of crypto-related asset classes and funds, such as the suite of funds offered by the likes of ProShares and Greyscale.
Europe Vs. USA - A Divergence in Crypto Investment Figures
In all, there was a $30 million contrast between the two regions when it came to crypto investments last week, with Europeans piling-in $16 million into various crypto products, whilst Americans pulled-out $14 million from the crypto market.
When it comes to Europe’s most bullish countries, Germany topped the charts with inflows of $18.1 million, however quite surprisingly, the world’s second most-notorious ‘crypto hub’ Switzerland recorded the largest outflows of $2.6 million.
However, despite this recent uptick in crypto capital inflows last week, Europe’s monthly metrics still report net outflows of $24 million. Across the pond, things read even worse, as the US recorded monthly outflows of $67.7 million.
Such bearish sentiment has continued into broader crypto contexts, as world citizens traded $820 million worth of crypto the week - an almost $500,000 decrease on the 2023 weekly average of $1.3 billion. Further, the globe witnessed net digital asset investment outflows of $9 million, marking the 6th consecutive week of net negatives.
Cryptocurrency Specifics
Contributing to such numbers was Bitcoin’s (BTC) minor outflows of $6 million, which marked the coin’s third consecutive week of net negative trading. Additionally, short-Bitcoin saw outflows of $2.8 million, which aligns with the ongoing narrative of investors ‘continuing to capitulate over their short positions’ (which, so far, has led to outflows totalling 78% of assets under management over the last 22 weeks).
For the leader of the altcoin space Ethereum, this too has continued its net outflows into a sixth consecutive week (totalling $2.2 million). And as for its competitors XRP and Solana (SOL), these both saw minor inflows of $660,000 and $310,000, respectively.
Why the Divergence?
With regards to what European crypto bulls have recently contended with, the European Union (EU) began exploring a set of regulations called ‘Markets in Crypto-Assets’ (MiCA) over the summer.
Such framework- which is scheduled to come into effect in December 2024 - includes several ‘Level 2’ and ‘Level 3’ measures that surround the creation and services of ‘cryptocurrencies, stablecoins, and similar digital assets’.
As is the purpose of any regulatory implementation, the MiCA frameworks will offer greater legal clarity for European crypto investors moving forwards, which is indicative of their relative bullishness for investments in comparison to those across the pond.
Additionally- and in a feat the USA is yet to achieve - Europe’s first exchange-traded fund (ETF) also came into effect in August, by way of Amsterdam’s Jacobi FT Wilshere Bitcoin ETF.
On the flip side of things, America most-certainly hasn’t been dealt with the same set of circumstances. This was effectively outlined by the U.S. Securities and Exchange Commission’s Chair Gary Gensler in a recent Senate hearing, as when Senators posed questions regarding many different crypto matters, the former investment banker reiterated what we already know about DeFi in the US right now…
That is, that the SEC will continue delaying regulatory clarity in the country through its numerous ‘unregistered securities’ filings against crypto and DeFi projects, lawsuits against crypto exchanges, and lacklustre approach to approving the several spot Bitcoin ETF applications in waiting.
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This article is intended for educational purposes and is not financial advice.
