A week after seeing the largest weekly inflow of $160 million into digital asset investment products since July 2022, the pace of inflow has stalled, according to the latest Digital Asset Fund Flow Report Issued by CoinShares on a weekly basis.
According to the Crypto Data analytics firm, “digital asset investment products saw a total decrease of US$2.5m, with trading volumes across investment products falling 33% compared to the previous week”.
This was reflected in the wide Bitcoin Markets where trading volumes on trusted exchanges fell by 61%, with both data points suggesting much less participation in the crypto market over the past week,” Coinshare continued.
Indeed, according to data presented by The Block, the seven-day moving average stood at about $22.5 billion as of Monday, up from about $46 billion in mid-March.
The low volume comes at a time when bitcoin has been moving sideways in the $28,000 region for some time, while other cryptocurrencies are also subject to rangebound conditions.
Bitcoin enjoys good flow
Looking under the hood, sentiment is actually more positive for bitcoin.
The world’s largest cryptocurrency by market capitalization saw inflows of $8.8 million, while smaller bitcoin investment products saw outflows of $2.5 million.
CoinShares said the price appreciation in bitcoin has left the dollar value of total assets under management since the collapse of 3 Arrows Capital in June 2022 at US$23.5bn.
Ethereum and multi-asset products saw outflows of a combined $5.8 million, while smaller coins such as Litecoin, Tron, Solana, XRP and Polygon saw marginally smaller inflows.
According to CoinShares, “inflows into short-ethereum (US$0.5m) suggest investors are concerned about an upcoming Shanghai upgrade that will enable un-staking (yield distribution)”.
Data from alternative crypto analytics firm CryptoQuant, which instead refers to on-chain data, suggests that the amount of bitcoin held by digital asset managers, which can include trusts and exchange-traded products, has soared in recent weeks. are growing american banking fail in mid-March.
According to CryptoQuant, fund holdings stood at 692,000 BTC (about $20 billion at current prices) as of Sunday, up from about 688,000 BTC on the 14th.th of March.
At current levels above $28,000, bitcoin price has risen sharply to the $20,000 level since a brief drop in mid-March.
Analysts attribute the cryptocurrency’s sharp rebound to 1) safe-haven demand amid concerns about the US (and global) bank crisis and 2) bet. The Fed’s tightening cycle is almost done And there could be a cut in interest rates soon, which is weighing on US bond yields and the US dollar (and boosting crypto in general).
According to data from CryptoQuant, increased investor demand for the bitcoin trust and exchange-traded products may have played a role in the price rise.
A greater share of bitcoin moving toward these types of investors suggests growing institutional adoption, which has been viewed as a major long-term driver of crypto price appreciation in the past.
Here’s Why Bitcoin Could Dominate Institutional Crypto Demand
Institutional demand may disproportionately dominate bitcoin in the next bull cycle.
It’s not just because bitcoin, the world’s first, oldest, and most secure cryptocurrency (at least according to many proponents), is seen by many as the best bet against a banking crisis the traditional financial system is in.
This is also because bitcoin is fairly clear cut when it comes to regulations, whereas many other cryptocurrencies are not.
Take the US Securities and Exchange Commission. They have publicly claimed that bitcoin is a digital commodity and therefore not under their regulatory oversight, but that most other cryptocurrencies are securities.
These include crypto networks such as Ethereum, which offers a yield to stakers of its Ether token, some SEC potentially looking at security as,
And it’s not just the stakes that put a cryptocurrency at risk of being considered a security.
The way it was initially distributed was also a risk, as Ripple found out after being sued by the SEC in 2020 over the distribution of its XRP token, which the SEC claimed was an unregistered securities offering. Was.
Momentum appears to be leaning towards Ripple winning this lawsuit Although now.
Bitcoin appears to be the only cryptocurrency all that clear right now (though for the same reasons, there’s also a very strong argument that the likes of Litecoin and Dogecoin are also digital commodities).
This means that investors may prefer to invest in bitcoin over some of its leading smart-contract-enabled, proof-of-stake powered layer-1 blockchain rivals such as Ethereum, Cardano, Solana, etc.