Markets
Institutional flows reached record levels in 2024
7:30 p.m. ▪ 4 min reading ▪ by Evans S.
The year 2024 marks a turning point for cryptocurrencies. Institutional investors, once cautious, are now rushing into this market with unprecedented vigor. Capital flows are reaching new highs, a sign of growing interest in digital assets. This dynamic promises to shake up the global financial landscape.
The rise of institutional investments
Since the start of the year, financial institutions have invested colossal sums in cryptocurrencies. While hedge funds are betting on a decline Last week, $1 billion was added to crypto-denominated assets, bringing inflows to $14.9 billion for 2024. This figure far exceeds the previous record of $10.6 billion set in 2021.
The reason for this enthusiasm? Increased confidence in the stability and growth potential of cryptocurrencies. According to James Butterfill, head of research at CoinShares, “the only other year to reach these levels is 2021.” This trend is driven by the growing adoption of blockchain technologies and a better understanding of the benefits they offer, such as decentralization and enhanced security.
Ethereum and Bitcoin: the stars of the crypto market
CoinShares Weekly Report reveals that Ethereum has been particularly favored by institutional investors. Last week, $36 million was purchased by institutions, the highest figure since March. This increase is mainly attributable to the SEC’s approval of spot ETFs on Ethereum, sparking renewed interest in this asset.
However, bitcoin remains the undisputed leader. With $1.05 billion added to their portfolios last week, institutions continue to favor this cryptocurrency. Cumulative bitcoin inflows now total $14.6 billion for the year. This phenomenon is explained by the perception of bitcoin as a store of value comparable to gold, offering protection against inflation and economic uncertainties.
Challenges and perspectives for 2024
Despite this tremendous growth, the cryptocurrency market is not without its challenges. Outflows from Grayscale, the largest Bitcoin ETF provider, have slowed but remain significant. The company holds 34% of the market with 288,000 BTC, or $19 billion. However, outflows since the start of the year amount to $17 billion. This slowdown could indicate stabilization, but also increased caution among investors in the face of market volatility.
On the other hand, Ethereum has seen cumulative outflows of $22 million this year, despite a recent week of gains. Ethereum supporters hope that the approval of the ETF will reverse this trend and revitalize institutional interest.
The year 2024 is already shaping up to be a record year in terms of inflows of institutional cryptocurrencies. The amounts invested reflect newfound confidence and growing adoption of digital assets by major financial players. However, this dynamic must be closely monitored, as volatility and uncertainties remain factors to take into account. The coming months will be crucial to see if this trend continues and what impacts it will have on the overall cryptocurrency market. One thing is certain: the global financial landscape is transforming, and cryptocurrencies are the main catalysts.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has never stopped researching the subject. If his first interest was in trading, he is now actively trying to understand all the advances centered on cryptocurrencies. As an editor, he aspires to continually deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article belong solely to the author and should not be considered investment advice. Do your own research before making any investment decisions.