Capital flows into cryptocurrency-related investment products & Bitcoin rose again last week, though the pace of growth has slowed since the beginning of this year, possibly marking an area top in institutional demand.
Net inflows summed $21 Mln for the week ending 27th March, this year, consistent with Coinshares, a renowned digital-asset manager. That was rock bottom level since October last year when Bitcoin [BTC] was trading sub -$14k.
Coupled with low investment volumes, investor appetite for cryptocurrencies appears to possess waned. The decline coincided with the lackluster price performance of major assets like Bitcoin [BTC] and Ethereum [ETH], that are unable to check new highs in recent weeks. Daily trade volumes for digital asset products fell to $788 Mln last week compared with $900 Mln for the entire of 2021.
Coinshares outlined that the profit-taking was also live as investors sitting on large unrealized gains decided to require some off the table.
“We have recently witnessed a big reduction in inflows and in some cases outflows, for the larger and longer-established pre-2016 investment products,” the asset manager said, explained:
“… we believe this is often due to investors sitting on multi-year gains taking profits.”
Although Bitcoin investment products generated nearly half the entire weekly inflows, on a market cap-adjusted basis, Ethereum products were the foremost popular. Inflows into ETH investment rose by $5.4 Mln last week.
Total inflows increased for 21Shares and therefore the Purpose exchange-traded fund but declined for CoinShares and virtually flat-lined for Grayscale.
Despite the modest pullback in inflows, institutional investors remain a drive behind the cryptocurrency market. As Coinshares reported earlier week, cryptocurrencies held by institutional investment managers have topped $57 Bln. And while Bitcoin and Ethereum still trade below all-time highs, the entire cryptocurrency market cap rose to near-record levels earlier on Monday. The entire cryptocurrency market cap peaked just north of $1.83 trillion, consistent with CoinMarketCap.