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Crypto Investment Products see $199 Million Inflows: Are Pro Investors Gearing up for Bitcoin Rally

Published June 26, 2023 2:46 PM
Teuta Franjkovic
Published June 26, 2023 2:46 PM
Key Takeaways
  • The weekly inflows into digital asset investment products reached $199 million, the highest level since July 2022
  • Bitcoin benefited the most, receiving US$187 million in inflows last week, accounting for 94% of all flows
  • Investors are becoming more optimistic about the likelihood that BlackRock and other top institutions would invest in digital assets

The greatest weekly inflows into crypto asset investment products since July 2022, totaling $199m, corrected about half of the past nine weeks of outflows. While ETP trading volumes were $2.5 billion for the week, 170% over the average for this year.

Weekly crypto Inflows Largest Since July 2022

According to European digital asset management firm CoinShares’ weekly fund report , the recent statements from prominent ETP issuers who have registered for physically supported ETFs with the US Securities & Exchange Commission are to blame for this increased optimism.

With $188m crypto inflows last week, or 94% of the overall flows, Bitcoin was the main winner. For the ninth week in a row, short Bitcoin had outflows totaling $4.9m, accounting for 60% of the total AuM for those 9 weeks.

Compared to Bitcoin’s inflows of 0.7%, Ethereum received inflows of $7.8 million, or just 0.1% of the total market capitalization. This suggests that Ethereum is now less popular than Bitcoin.

The Focus Stays On Bitcoin

With just extremely tiny inflows into XRP and Solana totaling $0.24m and $0.17m, respectively, this change in mood did not spread to altcoins. However, the elevated optimism did spur some investors to invest $8 million last week in multi-asset investing ETPs.

The total assets under management for cryptocurrency investment products also increased to a new annual high, topping $37 billion, wiping out the losses incurred since Three Arrows Capital’s bankruptcy in July 2022, which shocked the cryptocurrency industry.

The largest weekly inflow was $77.3 million for the Bitcoin exchange-traded instrument, BTCE, from London-based ETC Issuance GmbH.

The Bitcoin Strategy ETF (BITO) of ProShares attracted the greatest inflows in the United States, totaling $60.4 million. BITO, which was established in October 2021, follows the price of Bitcoin by strategically purchasing CME Bitcoin Futures. The fund’s total assets under management have reached $1 billion as a result of the influx from last week.

The “renewed positive sentiment” was linked by James Butterfill of CoinShares to a recent flurry of spot Bitcoin ETF applications filed with the U.S. Securities and Exchange Commission. The good “sentiment didn’t trickle down to altcoins,” Butterfill said, commenting that there were relatively tiny XRP and Solana (SOL) inflows as well.

BlackRock Application For ETF Started The Riot

The largest investment fund in the world, BlackRock, applied for an ETF on June 16, which served as the market’s initial stimulus.

Within a week of BlackRock’s submission, other fund managers including Valkyrie, WisdomTree, and Invesco followed suit with their own applications.

According to Markus Thielen, head of research at digital asset service platform Matrixport, the SEC could approve Blackrock’s request by September – October 2023 (at the earliest after 45 days) and  the iShares Bitcoin Trust ETF could accumulate approximately US$10 billion in Bitcoin holdings by the end of 2023.”

“Blackrock has submitted 575 ETF applications over the course of its existence, and only one of them has been turned down. As a result, the likelihood of approval seems strong. If regulatory standards are met, the SEC would also demonstrate its progressiveness,” Thielen continued.

In a tweet sent out this morning, senior ETF analyst for Bloomberg Eric Balchunas noted that BITO also surpassed its trading volume records on Friday, with “half a billion in shares” passing hands, which had previously only happened “about five times.”

Bitcoin Surges to Reach Its Highest Level Since April as Traders Go Bullish

Investors are becoming more optimistic about the likelihood that BlackRock and other top institutional players would invest in digital assets.

The market is still recovering from the scandal of FTX’s collapse and the accompanying regulatory ramifications, despite all the negative news that has recently surrounded the cryptocurrency field.

According to Vijay Ayyar , head of foreign markets at CoinDCX, India’s largest cryptocurrency exchange, “the slate of spot bitcoin ETF application announcements by larger institutions has definitely brought back bullishness into the crypto markets.”

“We also hit major support at $25K for BTC, and we’ve seen this move being driven more by pure spot buying rather than a short liquidation type move, which is quite healthy,” Ayyar said in his conclusion.

While trading in Asia on Monday afternoon, Bitcoin slightly decreased but remained above US$30,000. After several financial institutions this week expressed interest in developing cryptocurrency-related exchange-traded funds (ETFs), it increased by approximately 15% on the week as general market mood remained strong. With the exception of BNB and XRP, the prices of Ether and the top 10 non-stablecoin cryptocurrencies all decreased in value during the course of a single day.