The inflow to crypto funds increased last week, which led to cautious optimism that investors will expand their presence in digital assets despite geopolitical uncertainty and monetary tightening by central banks.
Investment assets for digital assets had a total inflow of $ 127 million for the week ending March 6, according to data from CoinShares. A CoinShares spokesman told the Cointelegraph that this was the highest weekly inflow since December 12, 2021. The increase also far exceeded the $ 36 million inflow recorded last week.
As in previous weeks, Bitcoin (BTC) products recorded the largest weekly inflow of $ 95 million. Bitcoin inflows have increased for seven consecutive weeks. Ethereum (ETH) received a total grant of $ 25 million, the largest in 13 weeks. The inflow of investments in investment products with several assets increased by USD 8.6 million.
So far, Bitcoin funds have seen a cumulative inflow of $ 166 million.
Cryptocurrency markets have shown a higher correlation with common stocks since the start of the Covid-19 pandemic, which means that digital assets have been negatively impacted by the transition of older finance to a risk-free environment in recent months. This shift was largely driven by the Federal Reserve’s plans to begin normalizing monetary policy. Recent events in Ukraine have also negatively affected the demand for high-risk investments, which include cryptocurrencies.
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Bitcoin is trading below the 11-year trend, an area where it has only been stable for 12.7% of its history. Source: Pantera Capital
However, according to crypto hedge fund Pantera Capital, the correlation between stocks and cryptocurrencies is “a short-lived thing.” As CEO Dan Moorhead points out, since 2010, the correlation between Bitcoin and the S&P 500 typically increases over a two-month period before the collapse. Moorehead noticed six downtrends in the S&P 500 during this period.