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A week after digital asset investment products recorded their largest weekly inflow of $160 million since July 2022, the pace of inflows has all but stopped, according to the latest data. Digital Asset Fund Flow Report Released weekly by CoinShares.
According to the crypto data analytics firm, “inflows into digital asset investment products totaled only US$2.5 million, with investment product trading volumes down 33% compared to the previous week.”
“This is reflected in the broader Bitcoin market, where trading volumes on trusted exchanges fell by 61%, both data points showing much less participation in the crypto market compared to the previous week. suggesting that,” continued CoinShares.
In fact, according to data presented by The Block, the seven-day moving average of volume was around $22.5 billion as of Monday, down from around $46 billion in mid-March.
While Bitcoin has been flattening out in the $28,000 area for some time now, volume declines, but other cryptocurrencies are also subject to range-bound conditions.
Bitcoin enjoys decent inflow
Looking under the hood, the sentiment is actually more positive than one would assume with Bitcoin.
The world’s largest cryptocurrency by market capitalization recorded an inflow of $8.8 million, while the short bitcoin investment product recorded an outflow of $2.5 million.
Due to the rise in the price of Bitcoin, the dollar value of total assets under management “is at its highest level since the US$23.5 billion bankruptcy of 3 Arrows Capital in June 2022,” notes CoinShares.
Ethereum and multi-asset products saw a combined outflow of $5.8 million, while smaller coins like Litecoin, Tron, Solana, XRP and Polygon all saw modest smaller inflows.
According to CoinShares, “Inflows into short Ethereum (US$500,000) suggest investors are concerned about Shanghai’s upcoming upgrade that allows de-staking (yield distribution) ”.
Data from alternative crypto analytics firm CryptoQuant, which references on-chain data instead, shows that the amount of Bitcoin held by digital asset managers has increased in recent weeks in the wake of the United States. Bank failure in mid-March.
According to CryptoQuant, the fund held 692,000 BTC (worth about $20 billion at current prices) as of Sunday, up from about 688,000 BTC on the 14th.th of March.
At its current level above $28,000, Bitcoin’s price has risen sharply since it dipped briefly to levels below $20,000 in mid-March.
Analysts attribute the sharp rebound in cryptocurrencies to 1) demand for safe havens amid concerns about the US (and global) banking crisis, and 2) Fed tightening cycle almost over And it could soon cut interest rates, which is putting pressure on US Treasury yields and the US dollar (and boosting cryptocurrencies in general).
Rising investor demand for Bitcoin trusts and exchange-traded products must have played a role in the price increase, according to CryptoQuant data.
The growing proportion of Bitcoin towards this type of investor suggests an increase in institutional adoption, which has in the past been a major long-term driver of rising crypto prices. It’s been advertised.
Here’s Why Bitcoin Can Dominate Institutional Crypto Demand
Bitcoin could disproportionately dominate institutional demand in the next bull market cycle.
It’s not just because Bitcoin, the world’s first, oldest and most secure cryptocurrency, is seen (at least according to many of its supporters) as the traditional financial system’s best bet against the banking crisis. .
And also because Bitcoin is almost completely clear regarding regulation, whereas many other cryptocurrencies are not.
Take the US Securities and Exchange Commission for example. Bitcoin is a digital commodity and not subject to regulatory oversight, while most other cryptocurrencies publicly claim to be securities.
These include crypto networks like Ethereum. This provides yield to Ether Token stakeholders. This is what the SEC will likely consider security.
And staking isn’t the only thing that puts cryptocurrencies at risk of being considered securities.
The initial distribution method was also a risk, as the SEC claimed it was an unregistered securities offering after Ripple was sued by the SEC in 2020 over its distribution of XRP tokens.
However, the momentum now seems to be tilting towards Ripple winning the lawsuit.
Bitcoin seems to be the only fully clear cryptocurrency at the moment (although there is a very strong argument that things like Litecoin and Dogecoin are also digital commodities for the same reason).
In other words, investors may prefer to invest in Bitcoin over major smart contract-enabled proof-of-stake Layer 1 blockchain rivals such as Ethereum, Cardano, and Solana.