Institutional inflows into crypto hit lowest levels since October
Capital inflows into cryptocurrency investment products rebounded last week, although the pace of growth has slowed since the start of the year, perhaps marking a local spike in institutional demand.
Net attendance was $21 million for the week ending 27th. March 2021, according to European digital asset manager Coinshares. This is the lowest level since October 2020, when bitcoin (BTC) traded below $14,000.
Combined with low investment volumes, investor interest in crypto assets appears to have waned. The decline coincided with the disappointing performance of major asset prices such as bitcoin and Ethereum (ETH), which have failed to test new highs in recent weeks. Last week, daily digital trading volume fell to $788 million from $900 million in all of 2021.
Coinshares noted that profit-taking also works in their favor, as investors sitting on large unrealized gains have decided to take some of it out.
We have recently seen a significant drop in inflows and, in some cases, outflows to larger longer-duration investment products launched before 2016, the asset manager said:
…We think this is because investors are relying on multi-year gains and taking profits.
Although bitcoin investment products generated almost half of the total weekly inflows, Ethereum products were the most popular when taking into account market capitalization. ETH mutual fund inflows increased $5.4 million last week.
Total inflows increased for the 21 stocks and the listed target fund, but decreased for the co-invested stocks and were essentially unchanged for the gray scale.
Despite modest inflows, institutional investors continue to drive the bull market for cryptocurrencies. As Coinshares reported last week, crypto assets owned by institutional investment managers have surpassed $57 billion. And while Bitcoin and Ethereum continue to trade below their all-time highs, the total market capitalization of cryptocurrencies reached near-record levels on Monday. According to CoinMarketCap, the total capitalization of the cryptocurrency market has peaked at just over $1.83 trillion.
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