Cryptocurrency Investment Products Witness $130M Inflows, Breaking Five-Week Outflow Trend
Summary:
In the week ending May 6, cryptocurrency investment products saw $130 million inflows, ending a five-week outflow streak, CoinShares reported. Most of the influx was attributed to Bitcoin investment funds, generating $144 million. The State of Wisconsin Investment Board also revealed its Bitcoin investment, signalling potential growing adoption of crypto products among conventional finance companies. However, there was a decrease in weekly trading volumes, suggesting reduced participation by Exchange-Traded Product (ETP) investors in the crypto ecosystem.
CoinShares reports that the week ending on May 6 saw a break in a five-week outflow trend in cryptocurrency investment products, as inflows reached a total of $130 million. The information was part of CoinShares' weekly report on Digital Asset Fund Flows, released on May 13. It showed that institutional investors were boosting their involvement in the sector with a $130 million inflow to cryptocurrency investment products during that week.
The majority of the influx was attributed to Bitcoin (BTC) investment funds, which garnered inflows of $144 million. However, weekly trading volumes in investment products showed a decrease from April's average of $17 billion per week to $8 billion for the week ending May 10.
James Butterfill, CoinShares' Head of Research, noted that such figures reflect a lower participation by ETP investors in the wider crypto ecosystem. He highlighted that these investors currently represented only 22% of total volumes on globally trusted exchanges, compared to 31% in the previous month.
In light of significant sell-offs and uncertainties about U.S inflation data prior to the week's Consumer Price Index data reading, institutions funneled nearly $116.8 million into spot Bitcoin ETFs between May 6 and May 10. This activity marked a slowdown in the departure from Grayscale’s GBTC.
Farside Investors' data revealed that institutional capital consistently flowed into the U.S spot Bitcoin ETFs, marking the highest-ever inflow since May 6. Three spot Bitcoin ETF funds contributed to these inflows on May 13—those managed by Fidelity, Bitwise and VanEck. Fidelity’s Bitcoin fund was the topachiever on that day, amassing $20.3 million in inflows.
The report also indicated increased inflows across the U.S., Switzerland, Hong Kong, Australia, and Brazil, while the most significant outflow came from Canada, which saw a withdrawal of $20 million.
Alongside the higher inflows to crypto investment funds, the State of Wisconsin Investment Board announced its involvement in spot Bitcoin investment. The Board declared in its May 14 3F filling with the U.S Securities and Exchange Commission (SEC) that it acquired 94,562 shares of BlackRock’s iShares Bitcoin Trust (IBIT) during the first quarter of the year. The Board also reportedly bought around $64 million of Grayscale’s Bitcoin Trust (GBTC) shares.
Asset manager MacroScope illustrated that the Board's filing was an important announcement for Bitcoin, which other investment boards would scrutinize closely and possibly emulate.
Eric Balchunas, Senior ETF Analyst at Bloomberg, noted that the Board's interest in spot Bitcoin ETFs materialized earlier than expected. He argued this development could be an auspicious sign for the market and predicted further growth as institutions usually move collectively.
The Wisconsin Investment Committee’s venture into digital asset markets, using spot Bitcoin ETFs, could provide a path for other traditional finance companies to follow. Spot Bitcoin ETFs provide an avenue for investors to gain exposure to Bitcoin without having to purchase the cryptocurrency directly, thereby increasing their appeal to conventional finance firms.
Published At
5/15/2024 12:32:02 AM
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