Green shoots? Institutional crypto funds see first inflows in 5 weeks

Published at: Jan. 25, 2022

After five weeks of constant outflows, institutional investment is finally trickling back into crypto funds with BTC the asset of choice and ETH falling out of favor.

In its weekly Digital Asset Fund Flows report published on Jan. 24, crypto investment firm CoinShares observed inflows for some institutional products.

It is the first time in five weeks that there has been a net positive inflow as $14.4 million re-entered the space with investors buying the dip.

The researchers reported that these inflows came during a period of significant price weakness, adding that this suggests investors “are seeing this as a buying opportunity” at current price levels.

Capital continued to flow out from CoinShares own BTC fund, however, 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:

Early signs that institutional money is starting to come back in. pic.twitter.com/4P7d3Fmq4I

— Willy Woo (@woonomic) January 24, 2022

However, the total assets under management for the funds included in the report was $51 billion, its lowest level since early August 2021. The AUM has been depressed due to the falling value of the underlying assets over the past couple of months. There was no change in the world’s largest fund, Grayscale, which has $30.6 billion in AUM according to its latest update on Jan. 25, however, the fund was trading at a record discount of around 30%.

Analysts and traders were looking for entry points following Bitcoin’s bounce and reclamation of $36K as reported by Cointelegraph.

The asset plunged to a six-month low of $33K during late Monday trading according to Tradingview but has since recovered solidly with a 10% return to $36,276 at the time of writing. Should spot market momentum continue in this direction, weekly institutional inflows are likely to follow.