Last week, institutional capital inflows into cryptocurrency funds totaled only $29 million, down 97% in less than a month. The institutions allegedly try to fix profits, which may lead to a powerful wave of correction in the crypto market.
The latest report from CoinShares reveals a sharp decline in institutional capital inflows to cryptocurrency funds in the first week of January, following record highs in late December 2020. In the first week of trading in 2021, institutional crypto products received just $29 million, more than 97% less than the $1.09 billion invested within the week before the Catholic Christmas.
The decrease in volumes may be due to the fact that traders traditionally take holidays for the new year, and to the fact that institutions preferred to take profits while the crypto market is at record high levels.
According to CoinShares estimates, as of January 8, $34.4 billion in institutional capital was invested in cryptocurrency investment products, of which $27.5 billion, or 80%, was invested in bitcoin funds, and $4.7 billion, or approximately 13,5%, was invested into ETH products.
The report also notes that bitcoin fund statistics show higher investment volumes than during the cryptocurrency bull rally in December 2017.
“We have seen much greater investor participation this time round with net new assets at US$8.2bn compared to only US$534m in December 2017.”
Institutional money is one of the main reasons for the current growth in bitcoin. In 2020, public companies acquired more than 1 million BTC with a current value of about $40 billion, according to Bitcoin Treasures. One of the most active institutional investors in 2020 is Grayscale Investments, which manages about 600,000 BTC.
“The narrative shift around Bitcoin over the last six months has been profound. Investors used to consider it a risk to allocate to bitcoin. Now it’s a risk not to allocate to Bitcoin,” said CEO at CoinShares Jean-Marie Mognetti.