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Buying Opportunity: Crypto Institutional Investors Pump $862 Million Into The Market

Crypto investment products are up again in terms of inflows, giving the crypto industry a much-needed breather. Recent market dynamics have seen Bitcoin leading the surge of inflows into crypto investment products, signaling a possible resumption of bullish sentiment.

James Butterfill, head of research at Coinshares, reported this inflow in a social media post. The statistics indicate that crypto investment products received inflows of $862 million over the timeframe spanning from March 23 to March 29 to reverse the record net outflows of $942 million set in the prior week. Unsurprisingly, most of the inflow went into Bitcoin, hinting at a potential buying opportunity for investors still waiting to get in on the asset during this bull run.

Institutional Investors Pump $862 Million Into Crypto Market

James Butterfill termed the inflow registered last week as a “recovery for ETFs.” This is rightly so, as these US-based Spot Bitcoin ETFs gave investors a scare in the prior week with lackluster inflow, hinting at the possibility that the bull run could be coming to an end. This led to crypto investment products bleeding for the first time after seven consecutive weeks of inflows. 

However, it would seem the sentiment regarding Spot Bitcoin ETFs is now back to a very bullish outlook. As a result, Bitcoin registered $865 million in inflows to bring its year-to-date inflow to $12.83 billion. On the other hand, Ethereum and multi-asset products registered $18.9 million and $2.6 million in outflows, respectively, to offset some of the inflows registered by Bitcoin. 

Inflows of $6.1 million, $0.2 million, $0.3 million, $1.1 million, and $2.4 million were recorded for Solana, Litecoin, XRP, and Polkadot, respectively. Polkadot also registered an inflow of $2.4 million. Short Bitcoin products, on the other hand, witnessed outflows of $2 million. 

Crypto inflows

Buying Opportunity For Bitcoin?

Bitcoin’s price surge for the past few months has largely been due to action surrounding Spot Bitcoin ETFs. Interestingly, last week’s inflow activity saw Bitcoin breaking into the $70,000 price territory multiple times last week. This bullish momentum wasn’t sustained, allowing the bears to create a resistance at around $71,000.

Nevertheless, the inflow indicates something bullish might be brewing behind the scenes. Fundamentals surrounding the crypto point to a bullish price action throughout April, particularly as the next halving approaches.

Bitcoin went through bearish price action over the weekend, correcting by almost 7% from $71,285. At the time of writing, Bitcoin has broken below a support at $68,500 and is now trading at $66,510. According to Santiment, the price dip has given crypto traders a sense of buying opportunity with calls of “buy and bullish” spiking across social media.

Crypto total market cap chart from Tradingview.com

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Crypto Institutional Investors Are Frontrunning Retail As Inflows Reach Record Highs

Crypto investment products continue to shine in the middle of a strong bullish market sentiment. New data has shown institutional investors and traders are now going full speed on crypto investment products, allowing inflows to attain a new inflow record. According to CoinShares, a digital asset investment firm, digital investment products registered a record weekly inflow of $2.7 billion last week, pushing the year-to-date inflow near a new record.

Crypto Institutional Investors Continue To Aim Higher

The crypto market has attracted its fair share of rich visionaries and institutional traders over the years, with most just dabbling in and out. Recent market factors, however, have opened the industry and made it palatable to big traders. As a result, trading volume from this cohort of investors has ballooned to new highs.

In its latest weekly report, CoinShares noted that investment products based on cryptocurrencies reached a new milestone of $2.7 billion inflow last week, bringing the run to six consecutive weeks of inflows. Hence, the total inflow year-to-date is now at $10.3 billion, just $300 million shy of the $10.6 billion inflows recorded in 2021.

To put this into perspective, we’re less than three months into 2024, and inflows are already on par with those recorded throughout the bullish cycle in 2021.  At the same time, trading volume reached a new record of $43 billion for the week, smashing the $30 billion record set in the previous week.

Unsurprisingly, most of this activity can be credited to Bitcoin, with the majority of inflow going into the cryptocurrency. According to CoinShares, Bitcoin remained the focus of investors to attract $2.6 billion in inflows last week, representing 96% of the total inflow. This comes despite a $1.65 billion outflow from Grayscale’s Spot Bitcoin ETF.

Speaking of Spot Bitcoin ETFs, there’s no denying the fact that these investment vehicles have been the primary catalyst for Bitcoin’s recent growth. This has allowed Bitcoin to break over various price resistance to reach new all-time highs. Last week, the 10 ETFs in the US ended the week at a net inflow of $2.238 billion, with BlackRock and Fidelity leading the charge. Despite recent price rises, short Bitcoin products also recorded $11 million in inflows last week.

On the other hand, Ethereum investment products witnessed an outflow of $2.1 million last week to reverse $84.7 million inflows recorded in the prior week. This is despite Ethereum crossing over the $4,000 price level for the first time in two years. The reverse case is for Solana, which witnessed $24 million inflows after an outflow of $11.9 million in the previous week. 

Polkadot, Fantom, Chainlink, and Uniswap also saw inflows of $2.7 million, $2 million, $2 million, and $1.6 million, respectively.

Crypto total market cap chart from Tradingview.com

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Crypto Riches: Altcoin Holders Swim In Profits, But There’s A Potential risk

So far, the average altcoin holders appear to have massive profits, as Santiment, a leading blockchain analytics firm, reported. According to the firm’s observations, many altcoin wallets have experienced substantial gains, with most crypto projects exhibiting bullish performances.

These realized gains began ever since the market turned bullish in mid-October 2023, according to Santiment, indicating that these massive profits accumulated on a “mid to long-term timescale.”

Potential Risk Observed

Despite these gains, Santiment has issued a cautionary note to investors, signaling “overbought” levels in the market. The blockchain analytics firm noted:

Outside of a few lagging altcoins, the vast majority of crypto projects have generated profits for the average wallet on a mid to long term timescale. This means that our model is indicating a fair bit of ‘overbought’ signals.

Though Santiment revealed that this does not necessarily imply an imminent market correction, historical data indicates a higher risk of opening new positions in such circumstances.

Notably, the firm’s analysis suggests that altcoins experiencing a 4+ month rally are particularly susceptible to heightened risk, as indicated by elevated MVRV levels.

For context, the Market Value to Realized Value, also known as the MVRV metric, is a crucial tool for assessing risk in the crypto market. This metric compares the current market price of a cryptocurrency to the average price at which it was last transacted on the blockchain.

A high MVRV ratio indicates that a significant portion of the market is profitable, potentially signaling overvaluation and increased risk of a market correction.

Anticipating Altcoin Season

Meanwhile, amid discussions of altcoin performance, crypto analyst Dan Gambardello has put forth insights regarding the potential for a “blast off” altcoin season. Gambardello suggests that Cardano (ADA) and Ethereum (ETH) could spearhead such a season, provided that Bitcoin (BTC) dominance begins to decline.

Drawing from previous market cycles, Gambardello highlights the historical patterns where ADA and ETH have led the charge before other altcoins joined the upward trend.

Gambardello emphasizes the importance of monitoring Bitcoin’s dominance in assessing the likelihood of an altcoin season. While altcoins like ADA and ETH may exhibit promising signs, Bitcoin’s dominance remains a crucial factor influencing market dynamics.

Meanwhile, the altcoin market cap has marginally retraced from its recent peak above $900 billion, currently hovering slightly below this mark.

Altcoin marketcap on the 1-day chart on TradingView

Featured image from Unplash, Chart from TradingView

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Institutional Investors Pour $346 Million Into Crypto – Here Are The Winners

Crypto investment products have experienced another week of inflows, bringing the run to nine consecutive weeks of inflows. According to CoinShares’ latest report on digital asset investment funds, inflows into crypto products totaled $346 million last week, with some cryptos receiving more investments than others. 

With last week’s numbers, the total value of inflows into crypto investment funds this year now stands at $1.663 billion.

Overview Of Institutional Investment In Crypto This Week

Although volatile and still in its nascent phase, the crypto market has attracted its fair share of rich visionaries and institutional traders. While companies like MicroStrategy and Tesla are investing on the spot end of things by buying crypto assets, others are getting exposure to assets through exchange-traded products (ETPs). This is particularly good, as institutional backing in ETPs also brings more stability and legitimacy to the space.

According to CoinShares, Bitcoin has attracted most of the inflows. Bitcoin has been in the spotlight for the past few months, particularly with Spot Bitcoin ETFs waiting to be approved in the US. 

Bitcoin ETPs received a total of $312 million in new inflows last week, bringing its total inflows this year to $1.55 billion. At the same time, Ethereum ETPs witnessed an inflow of $33.5 million, a 915% increase from the previous week’s inflows of $3.3 million. 

Solana ETPs on the other hand, saw an inflow of $3.5 million, a 74% drop from the previous week’s inflow of $13.6 million. Polkadot and Chainlink also saw inflows of $0.8 million and $0.6 million respectively. On the other hand, short Bitcoin products had outflows of $0.9 million last week, a third consecutive week of outflows.

What Is Driving The Institutional Interest?

Institutional investments in digital asset products are now at the highest point since the bull market in late 2021. According to CoinShares, the total assets under management (AuM) are now at $45.3 billion. Most of the momentum for this surge came after the announcement of applications of spot Bitcoin ETFs in the US. 

Applications of spot Ethereum ETFs joined the list last week, spiking the flurry of inflows into Ethereum ETPs last week to extend a positive four-week run of $103 million.

ETPs are still one of the best ways for institutional investors to get exposure to cryptocurrencies like Bitcoin and Ethereum. Their use has been on the rise in recent months, and ETP volumes as a percentage of total spot Bitcoin reached 18% last week. 

This is poised to change soon when spot ETFs are approved and institutional investors have another way to get exposure to Bitcoin. Experts say the first approval for spot ETFs could come early in 2024.

Bitcoin price chart from Tradingview.com (Crypto institutional investors)

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New Reports Shows How Much Capital Was Pulled Out Of Crypto In August

The crypto industry is known for its sheer price movement volatility, driven mainly by events and liquidity crunches. Since the beginning of the year, there has been a noticeable and consistent outflow of cash from the cryptocurrency market, which is unsurprising. 

According to Bitfinex’s latest report, this capital drain was evident in August, as the crypto market saw an exit of about $55 billion in capital from major cryptocurrencies.

$55 Billion Drained In The Past Month

Bitfinex’s analysis, which measured the aggregate realized value metric of Bitcoin (BTC), Ethereum (ETH), and major stablecoins like Tether’s USDT, USD Coin (USDC), BUSD, Dai, and TrueUSD (TUSD), indicates that about $55 billion in capital exited the market in August.

Although the market struggled for most of the first half of the year, things became different in July as Bitcoin spearheaded inflows. During this period, Bitcoin crossed $30,000 for a while as over $100 billion has entered the market. However, the momentum changed in early August, as profit-taking and continued mixed signals from the US economy triggered outflows. 

“A deep dive into the data reveals a prevailing trend: by early August, the industry had begun to experience capital outflows,” said the report.

Interest from institutional investors during this period, especially, started to wane as digital asset investment funds registered outflows after four weeks of heavy inflows. The trend has continued to the time of writing, as the run of outflows now totals $294 million. 

What Caused The Crypto Capital Drain?

The report from Bitfinex shows that August’s capital drain was the biggest this year, especially for Bitcoin. Most of this drain came from two isolated events, resulting in immense price movement in a relatively short period. In particular, the August 17 flash crash saw Bitcoin’s price drop by 11.4% in a few hours. 

“August was the largest red monthly candle for BTC since the bear market bottom was formed in November 2022 at –11.29 percent as per Bitfinex Data.”

The crypto derivative market has also had a similar trajectory. Ether (ETH) futures and options markets have slowed considerably in 2023. The average daily trading volume is down almost 50% from the two-year average to $14.3 billion daily. 

Bitcoin has also seen some liquidity crunches, as data shows almost 69% of all mined Bitcoin have not moved in over a year. On the other hand, this suggests a high conviction from investors and a buoyant outlook on the future of the digital currency. 

September has been relatively quiet regarding price movement, and the industry awaits the beginning of the next bull market. However, this crypto exchange founder believes that a bull run already started in March but the market is yet to catch on.

Crypto total market cap chart from Tradingview.com

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Bank Of Canada Study Shows Crypto Ownership In The Country Fell In The Last 2 Years

A recent study by the Bank of Canada (BoC) has shown a decline in the ownership of cryptocurrencies over the two years. The BoC has attributed this decline in crypto ownership to ecosystem collapses, regulatory hurdles, and price depreciation.

Bitcoin’s Decline Most Notable

According to the Bitcoin Omnibus Survey, Bitcoin’s ownership across the country dipped to 10% at the end of last year. This decline has been attributed to various factors, including the significant drop from its all-time high due to the current market conditions, especially since Bitcoin’s price crashed over 50% from its all-time high of $69,044.77 last year. 

The survey also cited FTX’s unexpected collapse as contributing to the decline, as it prompted enhanced scrutiny from regulators while also creating doubts in the hearts of crypto investors.

The decline in Bitcoin ownership wasn’t a result of investors moving their money to other crypto assets given that altcoins also suffered a similar fate to Bitcoin, as ownership in these digital assets also experienced a downward trend last year.

The report read:

Investors did not appear to shift out of Bitcoin and into other cryptoassets, as we observe decreased ownership of altcoins.

There are some positives for Bitcoin and the crypto ecosystem, as Bitcoin’s ownership is still higher than the 8% recorded between 2018 and 2020. Another silver lining is that many locals are aware of Bitcoin (meaning they could invest in it in the near future), as general awareness of the token has been at an impressive 90%.

However, despite being aware of the term Bitcoin, many Canadians still don’t understand how the cryptocurrency operates. According to the BoC’s research methodology, 61% of non-bitcoin owners showed low crypto literacy. Meanwhile, a meager 30% of Bitcoin owners exhibited high-level crypto literacy. 

Crypto total market cap chart from Tradingview.com

Financial Literacy Doesn’t Equate To Crypto Enthusiasm

Many would have predicted that persons with higher financial literacy would be more bullish on Bitcoin and other crypto assets. However, that isn’t the case in Canada, according to the survey. Interestingly, respondents with a high financial literacy were the ones who were quick to exit the crypto market. In contrast, those with a lower financial literacy remained bullish despite the market conditions and regulatory concerns. 

While these figures may not be so encouraging, there is enough reason to believe that the growing adoption of cryptocurrencies worldwide will impact the future of crypto ownership in the country as more locals gain crypto literacy. 

Furthermore, efforts from the authorities to provide regulatory clarity could also help as it will boost investors’ confidence in the country and consequently increase crypto ownership in the country.

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Investor Indifference Follows Bitcoin’s Break Above $20,000

Bitcoin has been seeing a lackluster performance in the last couple of weeks, and crypto investors have responded in kind to this. After a couple of weeks of tethering above $20,000, the digital asset’s price had finally fallen below this important technical point, triggering outflows in the market. For the past week, institutional investors have continued to feel the fatigue in the market, so while there were outflows, they still remain quite muted.

Bitcoin Loses $29 Million

Bitcoin outflows have continued into another week. This has now brought outflows for the digital asset into three consecutive weeks with no signs of a reversal. The total came out to $29 million in outflows for the week. It marked another week where bitcoin had sent the majority of outflows, although others had recorded outflows.

The inflows were more localized to short bitcoin, which once more speaks to the bearish sentiment that is brewing among bitcoin investors. Despite not being large by previous margins, the $1 million into short BTC shows that institutional investors continue to exercise caution when investing in the market. 

It is understandable, given the stance that the Fed has taken when it comes to the economy. In a bid to get inflation rates under control, the Fed has taken what is known as a “hawkish” stance, causing investors to cling tightly to capital.

Outflows Remain The Order Of The Day

Outflows were not only recorded in bitcoin alone, although it was the focus for the week. The second-largest cryptocurrency by market cap, Ethereum also saw outflows totaling $1 million for the same time period. Investors had been very bearish on the digital asset until the announcement of the Merge changed sentiment. However, it is obvious that the bullish sentiment did not last very long. 

Digital asset investment products, just like bitcoin, have now marked their third consecutive week of outflows. It saw outflows reaching $27 million for the week. The majority of the outflows had come from three countries, including the US, Sweden, and Germany, with a combined total of $26.5 million.

Interestingly, minor outflows had flowed into other DeFi platforms such as Solana, Cardano, Uniswap, Tezos, and Chainlink. Most of the inflows had come from Brazil, with a total of $1.2 million.

The market, in general, is still struggling despite bitcoin recovering above $20,000 once more. There is very weak momentum which makes this a seller’s market. 

Featured image from Forbes, chart from TradingView.com

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Majority Of Crypto Holders Will Hold Through An 80% Crash, New Survey Shows

A new survey has mapped out the sentiment of crypto holders towards the present market climate. It shows how most investors are looking at the market despite the recent crash. This survey from Deutsche Bank shows that more and more crypto investors are leaning towards holding for the long-term than selling. The majority have revealed that they would not sell their holdings even if cryptocurrencies lost a large chunk of their value.

Holding Crypto For The Long-Term

A recent Deutsche Bank survey titled “The Future of Cryptocurrencies” has found that more investors are leaning towards long-term holding. Out of a total of 3,250 U.S. respondents that were surveyed, 680 revealed that they used cryptocurrencies. The survey went on to further evaluate these investors which yielded some interesting findings.

Related Reading | Bitcoin Mining Stocks Lose 50-60% Value Since Crypto Price Peak

The majority of these holders said that they planned to hold their crypto through the worst of the market downtrend. Only less than half of respondents said that they would reduce or leave the market entirely if the value of their cryptocurrencies fell below 80%. The majority revealed that they planned to hold through no matter how bad the market got.

Crypto total market cap up at $1.95 trillion | Source: Crypto Total Market Cap on TradingView.com

These respondents are mainly small-time holders who have put less than $10,000 in the market overall. 38% admitted to only putting less than $1,000 into crypto, so these are everyday investors.

A majority of the polled users said that they had only recently gotten into crypto. A total of 65% said that they had started investing in the market in the last year alone. The main motivator? To make money from their investments. But not everyone’s motivation was to make money. A lesser but significant percentage admitted that they got into the market out of curiosity or exploration. Others also admitted that they got into the market as a way to diversify their investment portfolios.

Outlook For The Future

The polled individuals also gave their forecasts for the future. For leading cryptocurrency bitcoin, 25% of the respondents said they expected to see the digital asset grow as high as $110,000 in the next five years. A more conservative forecast compared to what has been put forward by experts in the space but it speaks to the long-term bullish outlook of the investors.

Related Reading | Bitcoin Dominance Will Continue To Decline In Favor Of Ethereum, Altcoins, FTX US President

A further 70% revealed that they planned to increase their crypto activity in the next 12 months. 26% said that, on average, they made less than five transactions a month, with only 5% making more than 100 transactions a month.

As expected, the majority of investors from the survey were male. This fits into the broader where it remains a male-dominated space. However, women involved in the space are growing by the day. The Deutsche survey found that 14% of all respondents were female. Males also showed more bullish sentiment towards the market.

Featured image from AiThority.com, chart from TradingView.com

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The Uber Rich Investors Are Picking This Altcoin Over Bitcoin

For many years and likely many years to come, bitcoin has been the number 1 digital asset for investors, especially those looking to invest in the long-term. When big money started entering into the crypto space, bitcoin was the first stop before it diversified into other assets. However, as time as gone by and more altcoins are beginning to gain popularity, bitcoin is losing its hold as the number 1 choice for investors.

A recent survey that featured respondents from the ultra-wealthy class showed that they did not favor bitcoin as their first choice. Rather, they picked an altcoin whose growth has rivaled and even surpassed that of bitcoin since its inception.

Ethereum Comes On Top

Crypto.com revealed that the wealthy are gradually moving away from bitcoin. Their obvious choice besides the leading cryptocurrency is ethereum, which is currently the second-largest cryptocurrency by market cap.

The numbers provided by the crypto exchange showed that ethereum has made its mark on the wealthy. With its broad range of use cases and applications, like decentralized finance (DeFi) and NFTs, the value of the cryptocurrency has shot up exponentially. And with that has come more confidence from investors.

Related Reading | Ethereum Bullish Signal: Number Of Holders With 1 ETH Touches New ATH

Crypto.com reached that that ethereum beat out bitcoin by 1% when it comes to the number of high-value investors going into crypto. Bitcoin came out at 33%, while ethereum made the top of the list at 34%, proving to be the preferred digital asset for investment purposes. Crypto funds came in third at 23%, other altcoins dominated at 15%, while Dogecoin, surprisingly, made the list with 2% of investors wanting to invest in the meme coin.

The crypto exchange also noted that about 1 billion people are expected to be invested in the crypto market by 2022. By the look of things, ethereum may see a larger share of investors compared to bitcoin.

But Why ETH?

Well, for those investing in the crypto space, there could be a number of factors. One is the low-interest rates offered by banks and returns from traditional investment avenues like stock and bonds being too low to combat the inflation rate. So in order to keep inflation from eating away at their wealth, these investors have chosen the crypto market for their needs.

ETH recovers to $2,600 | Source: ETHUSD on TradingView.com

Bitcoin had been the inflation hedge of choice for years before now. But all of that is changing as the ethereum network has taken major steps towards becoming deflationary. President and Founder of TIGER 21, Michael Sonnenfeldt, notes that the high inflation rates are what is pushing the uber-wealthy investors towards crypto, and by extension, ethereum.

“Like all investors, the super-rich are concerned about inflation and are looking to preserve their wealth in 2022,” said Sonnenfeldt.

Related Reading | Ethereum Whales Quietly Filled Up On ETH While Broader Market Panicked

Likewise, another member of TIGER 21 explained that investors are starting to favor ethereum over bitcoin. Additionally, similar projects like Solana and Avalanche are also enjoying this support.

“I am very bullish on both Bitcoin and ETH. My personal assessment is that the tide is turning in favor of ETH. I also like Ethereum alternatives like Solana and Avalanche.” – Andy Sack, member of TIGER 21.

Featured image from The DO, chart from TradingView.com