Markets
Institutions Increase Crypto Exposure as Weekly Volume Plunges: CoinShares
Large corporations saw inflows of $932 million, mostly in response to US CPI data.
According to CoinShares’ latest Digital Asset Fund Flows Weekly, weekly inflows into digital asset funds increased by the most since late March, even as volumes declined. Relationship.
Major institutions added $932 million in cryptocurrencies to their portfolios last week, the report said, while volume fell 75% from March to $10.5 billion. The seven days ending May 19 marked the second consecutive weekly inflow after four weeks of outflows.
The additional $932 million brings the annual total for institutions to a whopping $13.8 billion.
An old adage called “sell in May and walk away” appears to be in full force. Seasonal behavior of traders, with activity declining as summer approaches, explains the lower volumes. Meanwhile, inflows remain strong as institutions continue to accumulate digital assets through spot ETFs.
The disparity, according to James Butterfill, head of research at CoinShares, “means that the hype around the launch is over and trades are now based more on fundamentals.” He told The Defiant, however, that volume continues to be above the weekly average of $2 billion going into 2023.
Last week, major companies reacted quickly to the US consumer price index report, which showed signs of a slowdown in inflation, leading to a significant rebound of prices in the cryptocurrency market. On May 15, the U.S. Bureau of Labor Statistics reported that consumer prices had fallen for the first time in six months.
Butterfill added that the last three trading days, once the report was released, accounted for 89% of all institutional trading, “highlighting our view that Bitcoin prices have recoupled with interest rate expectations.”
Grayscale Stump Analyst
After experiencing $16.6 billion in outflows since launching the Bitcoin ETF on Jan. 11, Grayscale reported smaller inflows for the first time last week, boosting its cryptocurrency holdings by $18 million.
“I’m stumped about the grayscale,” Butterfill said. “It’s a much higher cost product, my only thought is that every ETF needs due diligence, and if you already have an issuer on board, you save a whole load of due diligence for the fund manager.”
So why do investors use it? “Just ease of access,” he told her.
It’s all about Bitcoin
Bitcoin was the corporate favorite with $942 million in inflows for the week, suggesting overall positive sentiment. Over the course of the month, institutions accumulated $790 million in BTC, bringing the annual total to $13.5 billion.
On the other hand, the asset least favored by large funds continues to be Ethereum. The asset saw $23 million worth of outflows, bringing the monthly total to $46 million discharged. Since the beginning of the year, 57 million dollars have left institutional coffers.
Most other cryptocurrencies have seen less accumulation by institutions. Big players added $4.9 million in SOL last week, along with $3.7 million in Chainlink and $1.9 million in XRP.
US entities continue to dominate their European, Asian, and Latin American counterparts. More than $1 billion in inflows went to U.S.-based funds, while Hong Kong turned bearish as $82 million companies exited.