Institutional investment in cryptocurrency still barely hanging on
Institutional investment into cryptocurrency funds has been positive for another week, but only just barely.
Although there has been an inflow of around $10 million over the past week, institutional investors are still hesitant, according to CoinShares’ weekly report published on Oct. 3. This suggests that there is still some uncertainty in the market, and that investors are not yet ready to make a full commitment.
It is the third week in a row that there has been a marginal inflow into the crypto market, but confidence over crypto products has yet to return as the bear market deepens. While some investors are still holding onto their crypto assets in hopes of a market rebound, others are selling off their holdings as the bear market continues.
It's clear that investors are still divided on where the cryptocurrency market is headed. Some are clearly still bullish on Bitcoin and Ethereum, while others are more bearish, choosing to sell off their altcoins. Only time will tell which side is right, but it's sure to be an interesting ride.
Major ETF Outflows: Investors Fleeing the Market
It's clear that institutional investors are losing interest in digital assets. CoinShares' data shows that trading volumes for investment products have declined sharply, falling to just $886 million last week. This is the lowest level seen in two years. What's driving this trend? It could be that institutions are simply losing confidence in digital assets as a whole. Alternatively, it could be that they're moving into other asset classes that are seen as more stable and promising.
This is good news for crypto investors, as it suggests that the bearish investors have already sold off their holdings and that the market may be stabilizing. This could be a good time to invest in crypto, as prices may start to rise again.
The data from Bloomberg Intelligence reveals that the crypto exchange-traded funds saw a 97% reduction in the amount of money withdrawn from them in the third quarter. This is a significant drop from the second quarter, where $683.4 million was withdrawn from these types of funds.
While some investors have exited the asset class, others remain, waiting for a rebound.
The strategist's point is valid - those investing in ETFs are different from token holders in that they are more likely to be looking to hedge the risks associated with buying crypto directly. However, it is also worth noting that there are now a number of ETFs available that track crypto assets, so investors may be able to get exposure to the sector without having to hold any actual tokens.
Macro Clouds Darken the Forecast
Many experts believe that the current level of fear and greed in the Bitcoin market is not sustainable in the long term. The fear and greed index is currently registering an extreme fear of 20, which is likely to result in a market correction in the near future.
Bitcoin Fear and Greed Index is 20. Extreme Fear
Current price: $19,642 pic.twitter.com/s6w36TBUQW
— Bitcoin Fear and Greed Index (@BitcoinFear) October 4, 2022
While the underlying crypto market has taken a hit this year, exchange-traded products (ETPs) have continued to see inflows of capital. According to the Financial Times, ETPs have seen global net inflows of $379 million so far this year. This is a positive sign for the future of the crypto market, as it shows that there is still interest in investing in cryptocurrencies despite the recent downturn.
Investors are still confident in the long-term potential of cryptocurrencies, despite the volatility in the markets. Todd Rosenbluth, head of research for ETF data analytics company VettaFi, said that investors have been using the volatility to add exposure to their portfolios, instead of moving away from cryptocurrencies. Rosenbluth believes that cryptocurrencies can add value to a portfolio in the long term, and investors are still confident in the potential of these assets.
The spot market is currently up 1.2% on the day, with the market cap reaching $980 billion at the time of writing. This is a positive development for the cryptocurrency market, which has been struggling to find traction in recent months.
Although institutional crypto inflows remain weak, the exodus of ETFs appears to be abating. This is good news for the crypto industry, as it suggests that institutional investors are still interested in the space despite the current market conditions.