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Solana Remains Institutional Investor Darling As Inflows Continue

Solana has gained the favor of institutional investors recently which has seen a marked increase in the amount of inflows that the altcoin has recorded. This trend has continued with last week’s numbers which show a significant amount of inflows for Solana compared to the likes of Ethereum.

Solana Inflows Reach $15.5 Million

According to data from the latest CoinShares report, the inflows into Solana for the last week came out to $15.5 million. This came while some altcoins such as Ethereum saw outflows for the week. For context, Ethereum outflows reached $7.4 million in the same time frame.

As a result of the latest round of inflows, the total Solana Asses under Management (AuM) has reached $74 million. This means that the Solana AuM is up 47% year-to-date, compared to Ethereum’s which has dropped continuously this year, climbing to $119 million in outflows year-to-date.

Cardano is another altcoin that saw inflows for the week but to a lesser degree. Its inflows were $0.1 million, bringing its total AuM to $24 million, with a $6 million increase year-to-date. Other investment products saw $0.9 million, leading their AuM to reach $76 million.

Multi-asset products, however, went the way of Ethereum with outflows of $0.6 million. This brings its AuM to $1.17 billion, a $31 million decrease year-to-date.

Solan price chart from Tradingview.com

Bitcoin Dominates Inflows

For the same week, Bitcoin once again came out ahead in terms of inflows, with numbers topping that of Solana. The leading cryptocurrency saw $55.3 million in inflows, bringing its AuM to $24.205 billion. The asset’s month-to-date inflows are currently sitting at an impressive $111.9 million.

In the same vein, Bitcoin’s year-to-date inflows have also remained on the high side with $315 million in inflows so far. This has further solidified its position as the leading asset with the most interest from institutional investors so far.

Short Bitcoin products were also not left out of the inflow trend. Its weekly inflows sit at $1.6 million, while the month-to-date inflows came out to $4.5 million. Its year-to-date inflows sit at $46 million, bringing its AuM to $99 million. In total, the AuM of crypto investment products is nearly $33 billion.

“Following recent price appreciation, total Assets under Management (AuM) have risen by 15% since their lows in early September, now totalling nearly US$33bn, the highest point since mid-August,” the CoinShares report said.

CoinShares also notes that the inflows could be linked to the excitement and anticipation of a Spot Bitcoin ETF being approved by the US Securities and Exchange Commission (SEC). However, the numbers are much lower compared to when asset manager BlackRock first announced that it had filed for a Spot Bitcoin ETF.

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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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Institutional Investors Flee Ethereum Amid Plunge Toward $1,500

Institution crypto investors have been pulling out of the market for the better part of this year, especially as the bear market has taken hold. However, Ethereum has suffered way more than other assets in this regard with outflows dragging total assets under management (AuM) down. This comes as Ethereum has struggled after falling below the $1,600 support.

Institutional Investors Pull Out Of Ethereum

In the latest iteration of its Digital Asset Fund Flows Weekly Report, alternative asset manager CoinShares has revealed a growing aversion from institutional investors toward Ethereum.

This is characterized by a tremendous amount of outflows spanning months that has caused its asset under management to decline faster than any other crypto asset.

The outflow trend also continued into last week as a total of $4.8 million flowed out of Ethereum funds. According to CoinShares, this brings the total year-to-date outflows for the digital asset to $108 million. This figure also represents 1.6% of Ethereum’s total assets under management, the largest percentage of outflows of any asset.

This trend points to a waning interest in Ethereum from institutional investors. It is even more glaring given that altcoins such as XRP saw inflows of $0.7 million as investors pulled out of Ethereum.

The asset manager put forward that this means that Ethereum is “the least loved digital asset amongst ETP investors this year.”

Ethereum price chart from Tradingview.com (Institutional investors Bitcoin)

Bitcoin Not Left Out

While Ethereum has undoubtedly not been a favorite of institutional investors, it was not the only large cryptocurrency plagued by outflows last week. Bitcoin, once again, saw the largest outflow volumes for the week with $69 million leaving Bitcoin funds. This is in contrast to short Bitcoin which saw a 5-month high weekly inflow of $15 million.

Blockchain equities also suffered from another week of outflows totaling $10.8 million this time around. In total, the current run of outflows has seen $294 million leave crypto and blockchain-related funds, accounting for 0.9% of the total assets under management.

This bearish sentiment among institutional investors is also highlighted by the fact that trading volumes saw a massive decline. The asset manager reported that volumes were just $754 million for last week, a 73% drop from the previous week’s figures.

Despite last week’s negative sentiment, this week seems to be working out better for the top assets with Bitcoin and Ethereum seeing trading volumes on crypto exchanges jump 96.28% and 41.16%, respectively. This could be signaling a coming reversal after a rocky weekend.

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Institutional XRP Holdings Rise Rapidly Following Ripple’s Win Over SEC

Now that Ripple has prevailed over the SEC in court, major players are eager to get their hands on XRP. According to recent data, institutions have been getting their hands on the cryptocurrency at a steady rate, as reflected in the digital asset fund flows report. 

Institutional XRP Holdings Rise Rapidly

In the days following Ripple’s partial victory in the SEC lawsuit, XRP volumes and prices rose dramatically as crypto traders rushed to the cryptocurrency in anticipation of a continued bull run. However, price metrics from Coinmarketcap show that the euphoria has subsided, with XRP now down 13.39% in a monthly time frame. On-chain data has also shown whales dumping the token to take profits, increasing the selling pressure on the token.

On the other hand, the tide is turning for the once embattled crypto among institutional investors as inflows into XRP digital asset funds are increasing steadily. According to the weekly report on the digital asset fund flows by CoinShares, XRP saw $0.5 million in inflows last week. 

Over the past 16 weeks, XRP has seen consistent inflows into crypto investment funds, making up 12% of all digital assets under management. In total, XRP’s assets under management have risen 127% since the beginning of the year, outpacing the growth of other popular altcoins like Polygon and Cardano.

Ripple (XRP) price chart from Tradingview.com

Investor Attitude Toward Crypto Funds Is Growing

Crypto funds, in general, have seen a shift to positive sentiment from investors. In the first week of the month, digital asset investment products saw outflows, with investors taking profits in recent weeks. Bitcoin alone saw outflows totaling $111 million, its highest since March. XRP, however, did witness inflows of $0.5 million during this period. 

The latest report would see digital asset investment products receive inflows of $29 million throughout the week. Bitcoin would also return as the primary focus, seeing $27 million of inflows after three prior weeks of $144 million outflows.

With the recent inflows, institutional investors are signaling their faith in XRP’s future by increasing their asset holdings. In July, many digital asset funds saw a 57% increase in their XRP Exchange Traded Products (ETPs). Fineqia, for instance, saw its XRP AUM increase from $49 million to $76.8 million. 

The price of the token appears to have weakened in momentum in recent weeks, much like the rest of the crypto market. At the time of writing, XRP is down by 0.60% in the last 24 hours and is trading at 0.625. Even so, the mood around XRP feels decidedly more optimistic as investors expect a final decision in the Ripple-SEC lawsuit. 

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A Technical Analyst’s Take on Crypto

TA is a graphical representation of investor behavior, with certain patterns and indicators providing a clue about what’s coming next. It has an important place in the three-legged stool of fundamental, technical and quantitative analysis.