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Bitcoin Attracts $1 Billion from Institutional Investors in 2023 — Why Supply Matters Before Halving

Last Updated November 14, 2023 11:24 AM
Teuta Franjkovic
Last Updated November 14, 2023 11:24 AM

Key Takeaways

  • Institutional investments in Bitcoin have notably increased in less than two months.
  • Bitcoin’s assets under management for crypto ETPs have nearly doubled since the beginning of 2023. 
  • The amount of BTC being stashed away for storage is now surpassing the mined amount by 2.4 times.

Increasing numbers of institutional investors are gravitating towards Bitcoin, propelled by key factors. Notably, Bitcoin is gaining recognition among institutional investors as a bona fide asset class with substantial long-term growth potential. Furthermore, the combination of Bitcoin’s limited supply and the impending halving event enhances its appeal, particularly for investors seeking scarcity — not to mention, a potential U.S. spot exchange-traded fund (ETF) offering.

The infusion of over $1 billion into Bitcoin within a mere two months serves as a resounding indicator of crypto’s resurgence, signaling a promising trajectory for the market in 2023 and beyond.

Institutional Investments In Bitcoin Top $1B

CoinShares’ latest weekly report  on November 13 reinforced the narrative of renewed capital influx into Bitcoin and altcoins. As excitement builds over the potential approval of the United States’ inaugural ETF, Bitcoin, Ether, and select major altcoins are experiencing price gains.

Since November 2022, the total crypto market cap has surged by $600 billion, as confirmed by TradingView data . However, the last two months have witnessed a significant uptick in funds directed towards crypto investment products, as detailed by CoinShares .

Crypto total market cap
Credit: TradingView

The report disclosed :

“Digital asset investment products saw inflows totaling US$293m last week, propelling this seven-week streak of inflows beyond the US$1bn mark. Year-to-date inflows now stand at US$1.14bn, marking the third-highest yearly inflows on record.”

Highlighting crypto’s renaissance in 2023, one standout statistic is the assets under management (AUM) for crypto exchange-traded products (ETPs), nearly doubling since the beginning of the year and increasing by almost 10% in the past week alone.

CoinShares emphasized: 

“At US$44.3bn, total AuM is now the highest since the major crypto fund failures in May 2022.”

The report also revealed that those with a bullish stance on BTC dominated the trading volume. It noted, “Bitcoin saw inflows totaling US$240m last week, propelling year-to-date inflows to US$1.08bn, while short-Bitcoin witnessed US$7m outflows, indicative of continued positive sentiment.”

Flows by provider, asset, adn exchange country
Credit: CoinShares

Re-evaluation Of Bitcoin Supply Dynamics

In response to the surging interest, on-chain analytics firm Glassnode has delved into reassessing Bitcoin supply dynamics . As the next block subsidy halving looms just five months away, the amount of BTC being stashed away for storage is now surpassing the mined amount by 2.4 times, according to Glassnode’s latest weekly newsletter, “The Week On-Chain.”

Bitcoin long-term holder supply storage vs issuance
Credit: Glassnode

The impending fourth halving event holds significance as a fundamental, technical, and philosophical milestone for Bitcoin. Glassnode notes its intrigue for investors, considering the notable return profile in previous cycles.

The newsletter features several charts, including one depicting BTC supply storage by long-term holders (LTHs), entities holding coins for 155 days or more. Philip Swift, the creator of the statistics platform Look Into Bitcoin, emphasized  the increasing presence of wallet entities, both large and small, stating, “This is what adoption looks like,” to X subscribers on that day.

How Will Halving Impact Investments In 2024?

The next Bitcoin halving event will occur in May 2024. During a halving event, the amount of Bitcoin rewarded to miners is reduced by half. This event is expected to further reduce the supply of Bitcoin, which could make the asset even more attractive to investors.

Overall, the increase in institutional investment in Bitcoin is a positive sign for the crypto industry. It suggests that institutional investors are becoming more comfortable with Bitcoin and see it as a legitimate asset class. The next halving event could also have a positive impact on Bitcoin prices, attracting even more investors to the asset.

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