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Bitcoin Outflows Accelerate As Global Crackdowns Take a Toll

Bitcoin inflows this year though remain strong at $4.2 billion. Photo: Reuters

• Digital asset manager CoinShares reports weekly outflow of $33 million

• Ethereum, the second-largest blockchain network, sees supply drop

 

Bitcoin saw its fifth consecutive week of outflows as regulatory crackdowns across the globe deterred investors from keeping the leading cryptocurrency.

According to data from digital asset manager CoinShares, outflows from the world’s most popular crypto totalled $33 million in the week ended August 6, compared with $19.7 million the previous week. But so far this year, bitcoin inflows remained a robust $4.2 billion.

Total crypto outflows, meanwhile, added up to nearly $26 million, although CoinShares noted that the magnitude of outflows was much less than in May and June.

 

Also on AF: China’s Sweeping Regulatory Crackdowns a ‘Profound Policy Shift,’ Morgan Stanley Says

 

Sluggishness in the crypto market was due in part to the global regulatory crackdown, analysts say.

“There’s all this focus on crypto because with all the new financial products and innovative solutions, governments, which are here to protect investors, are going to wonder whether this is a good idea and so, they’re going to look more into these,” said Matthijs de Vries, chief technology officer at infrastructure provider AllianceBlock.

Bitcoin on Monday hit an 11-week high above $46,000. Since mid-July, bitcoin has gained 46% against the dollar.

Data also showed that ether, the token used in the Ethereum blockchain, also saw outflows of $2.8 million, from a nearly $9-million outflow the previous week.

 

SOFTWARE UPGRADE

Last Thursday, Ethereum, the second-largest blockchain network, went through a major software upgrade, which is expected to stabilise transaction fees and reduce supply of the ether token.

Ether’s supply is being reduced through “burning,” in which tokens are sent to specialised addresses that have unobtainable private keys. Without access to a private key, no one can use the tokens, putting them outside the circulating supply.

About $59.2 million worth of ether tokens have been “burned” since Thursday’s software upgrade, according to ultrasound.money, a website that tracks ether burning and supply.

Investors expect ether to accelerate gains as the Ethereum network burns more of its tokens. Ether was last up 4.9% at $3,161.93.

 

  • Reuters and Sean O’Meara

 

Read more:

Malaysian Police Deal a Crushing Blow to Power-Grabbing Bitcoin Miners

China sets goal to be blockchain world leader by 2025

 

Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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