Cryptocurrency Market Sees Decline in Institutional inflows
Last week capital inflows into crypto based investment vehicles increased, even though the rate of growth has eased since the beginning of this year, likely indicating a temporary peak in institutional demand.
As per data provided by the European crypto asset management firm CoinShares, net inflows aggregated $21 million for the week ended March 27. It was the lowest level since October 2020 when Bitcoin (BTC) was trading below $14,000.
Furthermore, there is a considerable drop in investment volumes. That indicates fading of investor’s interest in cryptocurrencies. The drop occurred simultaneously with the uninspiring price movement of top cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), which were unable to reach new peaks in the past few weeks.
Everyday trading volumes for cryptos declined to $788 million past week, compared with $900 million for the entire 2021.
CoinShares has pointed out that profit booking is also happening as investors who are sitting on huge unrealized profits have started taking profits
The asset manager stated “We have recently witnessed a significant reduction in inflows and in some cases outflows, for the larger and longer established pre-2016 investment products.”
He further said “We believe this is due to investors sitting on multi-year gains taking profits.”
Even though Bitcoin based investment products created almost 50% of the aggregate weekly inflows, with respect to adjusted market capitalization, Ether based products were the most prevalent. Fund flow into ETH investment funds increased by $5.40 million prior week.
Aggregate inflows rose for 21Shares and the Purpose exchange-traded fund but decreased for CoinShares and almost unaltered for Grayscale.
In spite of the slightest decline in capital inflows, institutional investors stay as the underlying force for the crypto bull rally. As CoinShares made an announcement past week, cryptocurrencies possessed by institutional investment managers have surpassed $57 billion.
Even though Bitcoin and Ether is trading below their all-time peak, the aggregate crypto market capitalization increased to almost record levels on the first trading of the week. The aggregate cryptocurrency market cap hit a new high of $1.83 trillion, as per data provided by CoinGecko.com.