Capital flows to cryptocurrency investment products rebounded again last week, although growth rates have slowed since the start of the year, which could indicate a local peak in institutional demand.
Net inflows for the week ending March 27 totaled $ 21 million, according to CoinShares, Europe’s digital asset manager. This was the lowest level since October 2020, when Bitcoin (BTC) was trading below $ 14,000.
Coupled with lower investment volumes, investors’ appetite for cryptocurrencies appears to have decreased. The drop coincided with weak momentum in the prices of large assets such as Bitcoin and Ether (ETH), which failed to test new highs in recent weeks. Daily trading volumes for digital asset products fell to $ 788 million last week, down from $ 900 million for the full year of 2021.
CoinShares noted that profits were also at stake, as investors who were betting on large unrealized profits decided not to do something.
“Recently we have seen a significant reduction in inflows, and in some cases outflows from larger investment products that are well established until 2016,” the manager said, adding:
“We think the reason for this is that investors are sitting on multi-year profits and taking profits.”
Although Bitcoin investment products generated nearly half of all weekly flows, adjusted for market cap, Ether products were the most popular. The influx into the ETH mutual fund rose $ 5.4 million last week.
Total inflows for 21Shares and Purpose ETFs increased, but decreased for CoinShares and remained largely unchanged for Grayscale.
Despite the modest decline in inflows, institutional investors remain the driving force behind the cryptocurrency market. As CoinShares reported last week, the number of cryptocurrencies owned by institutional investment managers surpassed $ 57 billion. And while Bitcoin and Ether continue to trade below their all-time highs, the total market value of the cryptocurrency rose to an all-time high on Monday. According to CoinMarketCap, the total cryptocurrency market peaked at just over $ 1.83 trillion.