Source: Dado Ruvic/Reuters
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  • Despite a year of strong inflows, cryptocurrency funds saw outflows in the last three weeks of 2021, as shown in data from digital currency manager CoinShares
  • The final week of the year saw outflows of $44.4 million, totalling $361.2 million for the three weeks, but following record weekly outflows in mid-December indicates diminishing outflows
  • Ethereum saw inflows double while Bitcoin saw an increase of 16 per cent, the lowest growth in inflows compared to other products
  • Goldman Sachs analyst Zach Pandl predicts Bitcoin will take market share away from gold in 2022 as digital assets become more widely adopted

Despite a year of strong inflows, cryptocurrency funds saw outflows in the last three weeks of 2021, as shown in data from digital currency manager CoinShares.

The final week of the year saw outflows of US$32 million (A$44.4 million), taking the total for the three weeks to USD$260 million (A$361.2 million).

After record weekly outflows in mid-December, CoinShares said the trend suggests diminishing outflows.

Over the year, digital asset investment products saw inflows totalling US$9.3 billion (A$12.9 billion), marking a 36 per cent jump from 2020.

This is a small leap when compared to the 806 per cent increase seen from 2019 to 2020, which CoinShares said points to a “maturing industry”.

Moreover, this sentiment is boosted by total assets under management ending the year at US$62.5 billion (A$87 billion), versus US$2.8 billion (A$3.9 billion) at the end of 2019.

While Ethereum saw inflows double to US$1.3 billion (A$1.8 billion) year on year, Bitcoin saw an increase of 16 per cent, which CoinShares noted was the lowest growth in inflows relative to other digital asset investment products.

Bitcoin was trading at an all-time high on November 8 of $91,148.99, but has since nose-dived to $59,533.94.

Despite the drop, Goldman Sachs analyst Zach Pandl predicts Bitcoin will take market share away from gold in 2022 as digital assets become more widely adopted.

In a research note to clients the analyst detailed how the cryptocurrency has a 20 per cent share of the “store of value” market with a market capitalisation of $700 billion, compared to the around $2.6 trillion worth of gold owned as an investment.

Further, the note detailed that if bitcoin were to hypothetically grab a 50 per cent share of this market, its price would reach just over $100,000.

CoinShares data indicated an expansion in the total number of coins in investment product from 9 to 15. Last year 37 investment products were launched, versus 24 in 2020
and now total 132, suggesting demand and popularity of digital assets.

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