Markets
Institutions Increase Crypto Exposure as Weekly Volume Falls: CoinShares
Large entities saw inflows of $932 million, primarily in response to U.S. CPI data.
Weekly inflows into digital asset funds rose the most since late March, even as volumes fell, according to the latest Digital Asset Fund Flows Weekly from CoinShares. Report.
Large institutions added $932 million worth of cryptocurrencies to their portfolios last week, according to the report, while volume fell 75% from March to $10.5 billion. The seven days ending May 19 mark the second consecutive weekly entry after four weeks of releases.
The additional $932 million brings the annual total for institutions to $13.8 billion.
An old adage nicknamed “sell in May and leave” appears to be in full force. The seasonal behavior of retailers, with declining activity as summer approaches, explains the drop in volumes. Meanwhile, inflows remain strong as institutions continue to load up on digital assets through spot ETFs.
The disparity, according to James Butterfill, head of research at CoinShares, “means that the hype around the launch is over and trading is now done more on fundamentals.” He told The Defiant, however, that this volume continues to be above the weekly average of $2 billion starting in 2023.
Last week, major companies reacted quickly to the US CPI report which showed signs that inflation was starting to slow, leading to a significant rebound prices in the crypto market. On May 15, the U.S. Bureau of Labor Statistics reported that consumer prices fell for the first time in six months.
Butterfill added that the last three trading days – after the report was released – accounted for 89% of all institutional trading, “underscoring our view that Bitcoin prices have overlapped with interest rate expectations.”
Grayscale Strain Analyst
After suffering $16.6 billion in outflows since the Bitcoin ETF launched on January 11, Grayscale saw minor inflows for the first time last week, increasing its crypto holdings by $18 million.
“I’m confused about grayscale,” Butterfill said. “It’s a much more expensive product, my only thought is that every ETF requires due diligence, and if you already have an onboard issuer, it avoids a whole due diligence burden on a fund manager.”
So why do investors use it? “Just the ease of access,” he said.
It’s all about Bitcoin
Bitcoin was most favored by large companies with $942 million in inflows over the week, suggesting overall positive sentiment. During the month, institutions accumulated $790 million in BTC, bringing the annual total to $13.5 billion.
On the other hand, the asset least favored by big funds remains Ethereum. The asset saw outflows worth $23 million, bringing the monthly total discharged to $46 million. Since the start of the year, $57 million has left the institutions’ coffers.
Most other cryptocurrencies saw minor accumulation from institutions. Big players added $4.9 million in SOL over the past week, along with $3.7 million in Chainlink and $1.9 million in XRP.
American entities continue to dominate their European, Asian and Latin American counterparts. More than $1 billion in inflows were directed to U.S.-based funds, while Hong Kong turned bearish with $82 million in corporate outflows.