Institutional Crypto Funds Are Seeing Inflows Again

January 30, 2022 8:36 pm Comments

For institutional investment in the crypto industry, the first 5 weeks of 2022 mainly saw capital exiting large institutional crypto funds which concerned some investors.

However, for the first time in the year, inflows into these large funds are starting to appear again as it was recorded that the entire industry saw a positive inflow of $14.4 million.

The inflow is likely from large investors starting to buy the dip as the overall crypto market has been down almost 50% from their all time highs from the bull run in 2021.

The data also shows that the inflows started to appear when there was very little price stability which indicates that intuitional investors see a strategic play to increase their overall crypto positions at the current prices.

CoinTelegraph reports:

Capital continued to flow out from CoinShares own BTC fund, but 21Shares and ProShares registered minor gains.

Most of the inflows were for Bitcoin, which had $13.8 million for the week.

Ethereum was the biggest loser over the period with an outflow of $15.6 million, but the multi-asset products made up the balance resulting in a net overall inflow.

CoinShares observed that the current seven-week run of ETH outflows now total $245 million “highlighting much of the recent bearishness amongst investors has been focused on Ethereum rather than Bitcoin.”

Analyst Willy Woo also suggested it was early signs that institutional funds are starting to return.

The data has also indicated that the assets under management for these institutions are also at lows when compared to last year.

However, this does not indicate that they are managing a smaller position or reducing their position sizes in Bitcoin, Ethereum, Ripple, or other cryptos.

Rather, it just means that the value of the underlying assets that they are holding are currently worth less at the market price today which indicates that they are not exiting the market.

So far, there were a few assets other than Ethereum that experienced a net outflow in the institutional market.

FxEmpire reports:

The fact that the overall net flows were positive indicates a strong investment interest from investors, which translates to them buying the dip. However, that wasn’t the case with Ethereum.

However, it wasn’t Ethereum alone; certain ETPs too failed to draw in money last week. Leading that band was CoinShares XBT ETP, which registered almost $20 million in outflows.

Following it was the ETC group’s ETF, which posted negative net flows of $4.5 million, totaling its January outflows to $132 million. And even the Purpose ETF witnessed a similar fate losing up to $2 million.

Its hard to predict what this activity means for the overall broader crypto market as institutional moves typically does not move with the overall trend.

However, it might give some indication of what institutions are doing now during the price decline that we have been seeing since the start of the year.

So far, Bitcoin and multi-asset holdings are the areas where the most positive capital inflows occurred.


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