December market correction drags down crypto ETPs by $17B

The recent market correction in December has had a significant impact on digital asset investment products, with total assets under management for exchange-traded products (ETPs) plunging by $17.7 billion. 

According to a Dec. 23 analysis from CoinShares, digital asset funds saw over $1 billion in outflows between Dec. 19 and 20, likely in response to a slower pace of monetary easing in the coming year. 

On Dec. 18, the Federal Open Market Committee (FOMC) of the United States Federal Reserve reduced the federal funds rate by 25 basis points, bringing it to a target range of 4.25% to 4.50% — the lowest since February 2023.

However, updated projections indicated a more cautious approach to future rate cuts, with expectations of only two additional 25 basis point reductions in 2025, down from the previously anticipated four.

Despite economic uncertainty and price corrections, digital assets funds closed the week with positive net flows totaling $308 million. CoinShares report noted that while “outflows may sound alarming, they comprise just 0.37%” of crypto funds’ total value. 

Related: BTC price risks $20K crash: 5 Things to know in Bitcoin this week

ETPs flow breakdown

The majority of outflows were concentrated in foreign markets and multi-asset products over the past week. Germany, Sweden and Switzerland’s combined outflows reached $212 million between Dec. 16-20, while Canada’s markets saw $60 million outflows.  

On the positive side, the US amassed inflows of $567 million, followed by $16 million from Brazil and $10 million from Australia.

Bitcoin (BTC) led inflows over the week, dragging $375 million in capital, followed by Ether (ETH) funds with $51 million. Multi-asset products had a negative flow of $121.4 million, while Solana (SOL) funds saw $8.7 million outflows

“Bitcoin, despite the intra-week outflows, still saw net inflows for the week totaling US$375m, with little activity from short-bitcoin investors.”

Bitcoin’s price is down from around $106,000 on Dec. 16 to $93,370 on Dec. 20, marking a 10.5% drop over the period. Year-to-date, the cryptocurrency still posts 115% gains at the time of this writing. 

Related: Bitcoin Christmas: How to give family and friends useful crypto advice

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