Institutional inflows into crypto hit lowest levels since October
Managers bought $21 million worth of digital asset investment products last week, according to Coinshares. On a market-cap adjusted basis, Ethereum remains the most popular investment.
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Capital flows into cryptocurrency investment products rose again last week, though the pace of growth has slowed since the start of the year, possibly marking a local top in institutional demand.
Net inflows totaled $21 million for the week ending March 27, 2021, according to Coinshares, a European digital-asset manager. That was the lowest level since October 2020 when Bitcoin ( BTC ) was trading sub-$14,000.
Coupled with low investment volumes, investor appetite for crypto assets appears to have waned. The decline coincided with the lackluster price performance of major assets like Bitcoin and Ethereum ( ETH ), which have been unable to test new highs in recent weeks . Daily trade volumes for digital asset products fell to $788 million last week compared with $900 million for the whole of 2021.
Coinshares noted that profit-taking was also in play as investors sitting on large unrealized gains decided to take some off the table.
“We have recently witnessed a significant reduction in inflows and in some cases outflows, for the larger and longer established pre-2016 investment products,” the asset manager said, adding:
“... we believe this is due to investors sitting on multi-year gains taking profits.”
Although Bitcoin investment products generated nearly half of the total weekly inflows, on a market capitalization-adjusted basis, Ethereum products were the most popular. Inflows into ETH investment funds rose by $5.4 million last week.
Total inflows increased for 21Shares and 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 driving force behind the cryptocurrency bull market. As Coinshares reported last week, crypto assets held by institutional investment managers have topped $57 billion . And while Bitcoin and Ethereum continue to trade below all-time highs, the total cryptocurrency market capitalization rose to near-record levels on Monday. The total crypto market cap peaked just north of $1.83 trillion, according to CoinMarketCap.
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