The recent increase in institutional money inflows to the crypto market is a positive sign for the long-term health of the market. It suggests that institutional investors are increasingly seeing cryptocurrencies as a legitimate asset class with the potential to generate attractive returns.
In spite of the huge decrease in institutional investments during 2022, several major institutions remain optimistic about cryptocurrencies. One notable example is BlackRock, the largest asset manager globally, which has plans to provide crypto investment options to its clientele. Blackrock just filed its iShares Bitcoin Trust, an ETF that would have Coinbase Custody.
According to the report, the crypto markets have seen the highest inflows for 2023, following BlackRock’s application for a bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC).
The week witnessed the most significant weekly inflows since July 2022, amounting to $199 million. This influx corrected nearly half of the outflows observed over the previous nine consecutive weeks.
The report further stated that exchange-traded product (ETP) trading volumes were 170% of the average for the current year, totaling $2.5 billion for the week. CoinShares attributes this renewed optimism to recent announcements from high-profile ETP issuers that have applied for physically backed ETFs with the SEC. The total assets under management (AuM) now stand at $37 billion, the highest since before the collapse of Three Arrows Capital.
Regarding market share, bitcoin products absorbed most inflows with $188 million, while short-bitcoin products experienced outflows for the ninth consecutive week.
Other digital assets, including ethereum and multi-asset ETPs, also saw a significant increase, receiving inflows of $7.8 million and $8.1 million, respectively. In the past week, altcoins such as XRP and Solana recorded minor inflows of $0.24 million and $0.17 million, respectively.
This data underscores institutional investors’ growing interest and confidence in the crypto market, driven by positive developments and regulatory advancements. However, it is important to note that the crypto market is still a volatile market and there is no guarantee that the recent trend of institutional inflows will continue. Investors should carefully consider the risks involved before investing in cryptocurrencies.