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Crypto Inflows Surge Drastically: $1.4 Billion in One Week

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Last week, global crypto investment products saw a surge in net inflows, totaling $1.44 billion. This data comes from CoinShares’ latest report. Major asset managers like Ark Invest, Bitwise, BlackRock, Fidelity, Grayscale, ProShares, and 21Shares all contributed to this growth.

This influx marks one of the largest weekly net inflows on record. Year-to-date figures now stand at $17.8 billion. James Butterfill, CoinShares’ Head of Research, noted that this far exceeds the $10.6 billion net inflows during 2021’s bull run.

Despite this, trading volumes across crypto exchange-traded products remained low. Last week, volumes hit just $8.9 million, well below the $21 billion weekly average for the year. Butterfill pointed out that this dip is part of a seasonal pattern, typical for the summer months.

Bitcoin-based funds led the charge with $1.35 billion in net inflows. Meanwhile, short-Bitcoin products saw the largest net outflows since April, totaling $8.6 million. U.S. spot Bitcoin ETFs alone brought in $1.05 billion last week. These funds have seen total net inflows of $15.8 billion since their launch in January.

Factors Owing to Crypto Surge

Butterfill attributed this activity to two main factors. First, price weakness due to the German government’s Bitcoin sales. Second, a change in sentiment driven by lower-than-expected U.S. CPI figures. Investors saw this as an opportunity to increase their positions.

Bitcoin’s price has faced challenges recently, including the German government’s sales of seized Bitcoins and concerns over Mt. Gox payouts. Despite this, Bitcoin is up over 10% in the past week and 4% over the past day. This rise follows a failed assassination attempt on pro-Bitcoin former U.S. President Donald Trump.

Ethereum products also saw significant inflows, adding $72 million last week. Butterfill suggested this was likely in anticipation of U.S. spot ETF launches. The SEC approved eight 19b-4 forms for spot Ethereum ETFs from major players like BlackRock, Fidelity, and Grayscale on May 23. However, trading will only begin once the S-1 registration statements become effective, potentially this week.

Regionally, U.S.-based funds led with $1.3 billion in net inflows. Switzerland, Hong Kong, and Canada-based crypto investment products saw $58 million, $55 million, and $24 million in net inflows, respectively.

Crypto investment is booming despite seasonal lows. Investors are seizing opportunities, signaling confidence in the market’s future.

Ethereum Bleeds $61M: 2024’s Worst Performer- CoinShares

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CoinShares’ latest report has revealed a troubling trend for Ethereum and the broader digital asset market with outflows hitting $30 million last week. This marks the third consecutive week of outflows signaling investor caution and market volatility. Ethereum with its highest outflow amounting to $61 million since August 2022, has become the worst-performing digital asset investment product so far this year.

This was in contrast to prior weeks, when most providers recorded minor inflows, except Grayscale which saw $153 million outflows offsetting the inflows. Additionally, trading volumes surged by 43% week-on-week to $6.2 billion but remain well below the $14.2 billion weekly average for the year so far.

Nationwide, the US saw the largest inflows with $43 million whereas Brazil and Australia recorded inflows of $7.6 million and $3 million respectively. In contrast, Germany, Hong Kong, Canada, and Switzerland posted outflows of $29 million, $23 million, $14 million, and $13 million respectively.

Ethereum
Ethereum Bleeds $61M: 2024's Worst Performer- CoinShares 2

Ethereum, the second largest crypto registered the largest outflows since August 2022, totaling $61 million, bringing the last two weeks of outflows to $119 million, making it the worst-performing asset year-to-date in terms of net flows.

Solana and Litecoin Gain Inflows as Ethereum Stumbles

On the other hand, multi-asset and Bitcoin ETPs led the inflows with $18 million and $10 million respectively. Short-bitcoin also saw a rise in outflows totaling $4.2 million last week, suggesting a shifting sentiment. A range of altcoins saw inflows, most notable were Solana [$1.6 million] and Litecoin [$1.4 million].

Blockchain equities, despite the positive sentiment for digital assets this year, have suffered outflows of $545 million this year, representing 19% of AuM.

Ethereum’s latest outflow coincides with the pending approval of an ETF on July 4th. This development is being closely watched, as it is the culmination of almost three years of planning. The ETF flow has also negated the previous forecast of potential mass outflows from Bitcoin ETFs where investors rush to pour their money into the new ETH ETF.

Bitcoin Dominates As 2023 Sees 2.7x Surge in Inflows

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2023 has proven to be a banner year for Bitcoin, with digital asset investment products witnessing a staggering 2.7x increase in inflows compared to 2022. According to the latest report by CoinShares, “2023 Digital Asset Fund Flows Weekly Report,” the cryptocurrency market experienced a resurgence, marking it as the third-largest year since data tracking began in 2017.

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For the entirety of 2023, digital asset investment products attracted an impressive $2.25 billion in inflows, with the lion’s share going to Bitcoin. The surge in interest and investment in the final quarter of the year was particularly noteworthy, coinciding with growing indications that the U.S. Securities and Exchange Commission (SEC) was warming up to the prospect of launching Bitcoin spot-based exchange-traded funds (ETFs). The total assets under management (AuM) for digital asset investment products soared by a remarkable 129% over the year, culminating at a staggering $51 billion, marking the highest level since March 2022.

Bitcoin Dominance: Unprecedented 87%

Bitcoin captured a whopping $1.9 billion in inflows, constituting a staggering 87% of the total flows. This dominance in inflows is unprecedented in the history of cryptocurrency, surpassing the previous peak in 2020 when Bitcoin received 80% of the total flows. The lowest point was recorded in 2017, with a meager 42%. The lack of a discernible trend suggests that the surge is likely attributed to the hype surrounding the potential approval of SEC ETFs.

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While Ethereum experienced a recovery in inflows, reaching $78 million by the year’s end, it remains a laggard in comparison, representing only 0.7% of the total AuM. Solana, on the other hand, capitalized on investor reluctance toward Ethereum, attracting inflows totaling $167 million, which accounts for a substantial 20% of the total AuM.

Geographically, the United States led in terms of inflows, with a substantial $792 million. However, this accounted for only 2% of the total AuM. In contrast, Germany emerged as the front-runner, with inflows representing an impressive 22% of the total AuM, followed by Canada and Switzerland at 15% and 13%, respectively. The U.S.’s relatively lower share of inflows is perhaps indicative of investor preferences leaning towards a spot-based ETF. Meanwhile, blockchain equities also experienced a surge in fortunes, with AuM rising by an impressive 109%, accompanied by total inflows of $458 million – a remarkable 3.6 times the inflows recorded in 2022.

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Related Reading | Bitcoin ETF Issuers Face Pressure To Reveal On-chain Addresses

CoinShares Secures Option to Acquire Valkyrie’s Crypto ETF Unit

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European crypto asset manager CoinShares has obtained the exclusive option to acquire Valkyrie Funds, the exchange-traded fund (ETF) unit of its U.S. counterpart, Valkyrie Investments. This includes the Valkyrie Bitcoin Fund, which is currently awaiting approval in the United States.

The move, announced on November 17, is part of CoinShares’ strategic expansion into the U.S., a market increasingly seen as a potential hub for crypto ETF offerings. Jean-Marie Mognetti, the CEO of CoinShares, expressed the company’s desire to capitalize on the evolving global ETF market, especially in the U.S.

Crypto Spot ETPs Paving the Way

Mognetti highlighted the establishment of crypto spot ETPs (Exchange Traded Products) in Europe since 2015, a trend expected to be mirrored in the U.S. He sees this divergence in market evolution as presenting both challenges and significant opportunities for the firm.

The exclusive option for acquisition will remain active until March 31, 2024. During this period, Valkyrie Funds will continue to operate independently until the acquisition by CoinShares is finalized.

As part of the agreement, the two companies also agreed on a brand licensing term, allowing the CoinShares name to be used in future S-1 filings with the U.S. Securities and Exchange Commission (SEC), typically used when companies plan to go public.

If the SEC approves the Valkyrie Bitcoin Fund, Valkyrie intends to incorporate the CoinShares name into the ETF. Valkyrie initially filed for the spot Bitcoin ETF, valued at $36,473, on June 21, alongside BlackRock and several other financial firms.

With over $3.2 billion in assets under management, CoinShares expressed optimism about the U.S. crypto ETF market in September and emphasized that the economic powerhouse is actively addressing digital asset regulation.

OKX Revolutionizes Institutional Crypto Trading with Komainu & CoinShares Partnership

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In a move aimed at fostering the adoption of digital assets among institutional investors, cryptocurrency exchange OKX has joined forces with custody provider Komainu and asset manager CoinShares. The collaboration seeks to enable round-the-clock trading of segregated assets while addressing counterparty risks that have been identified as a significant hurdle for institutional traders.

CoinShares & OKX: A New Era in Trading

CoinShares is set to conduct trading activities on the OKX exchange, while Komainu, acting as a third-party custody provider, will secure and manage the collateral assets. This approach minimizes the risks associated with counterparties failing to fulfill their obligations during trading transactions.

Sebastian Widmann, Head of Strategy at Komainu, emphasized the importance of emulating traditional financial market infrastructure to attract institutional adoption of digital assets. “By acting as independent, trusted, and regulated third-party custodians for collateral assets, we give our clients additional assurances throughout their trading lifecycle,” stated Widmann in an official statement.

Lennix Lai, Chief Commercial Officer at OKX, highlighted the significance of this partnership in addressing a critical concern for institutional traders—counterparty risks. Lai stated, “Secure custody solutions are live. Regulatory frameworks are taking shape. Exchange liquidity is deepening alongside the development of the trading ecosystem.

However, counterparty risk is a big remaining hurdle for institutional traders.” He believes that the added protection provided by Komainu’s custody services reinforces trust and confidence among institutional traders, creating a more reliable landscape for digital asset transactions.

In a previous interview, Lai stressed the importance of elevating compliance standards within the crypto space to attract traditional finance investors.

Lewis Fellas, Head of Hedge Fund Solutions at CoinShares, emphasized that the partnership establishes a “legally robust mechanism” for the mutual management of assets. Fellas further noted that the collaboration showcases CoinShares’ expertise in negotiating complex tripartite agreements covering collateral, security, and legal risks—essential factors for institutional investors.

This strategic partnership follows the exchange’s recent collaborations, including an expanded partnership with CoinRoutes on August 17, 2023, to provide API-enabled trading services to institutional clients. On July 21, 2023, OKX partnered with liquidity provider Heybit to introduce the ‘Alpha on OKX’ automated trading service to global users.

Additionally, on September 19, 2023, OKX announced its partnership with Solana Mobile to integrate the OKX app into the Solana Saga’s dApp store, positioning it as one of the first exchange apps available on the Solana Web3 smartphone. This collaboration aims to unlock OKX’s industry-leading Web3 products for Saga users, serving as a powerful gateway to the world of digital assets.

Related Reading | India’s Supreme Court Denies Crypto Plea, Investors in Limbo 

Digital Assets Gain $66M In 4th Consecutive Week: Report

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In recent events, digital asset investment products have witnessed an impressive streak of four consecutive weeks of inflows, amassing $66 million. This brings the cumulative influx over the past four weeks to $179 million. The surge in investment can be attributed to recent price hikes, resulting in a 15% surge in Total Assets under Management (AuM) since their September nadir, now standing at nearly $33 billion, marking the highest point since mid-August.

According to Coinshares report, the most recent uptick in inflows can be largely attributed to the anticipation surrounding the imminent launch of a spot bitcoin ETF in the United States. Nevertheless, compared to the initial surge of funds that followed Blackrock’s announcement in June, where four consecutive weeks of inflows tallied a staggering $807 million, the current inflow figures appear notably modest. This suggests that despite the favorable outcome of the Grayscale vs. SEC court ruling, investors are treading with greater caution this time.

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Source: Coinshares

Digital Asset Influx Trends

Last week, 84% of the total investment in Digital Assets inflows were directed towards bitcoin products, which resulted in an impressive $315 million year-to-date influx. However, the recent price surge led to a $23 million influx in short-bitcoin positions. By the end of the week, these positions had been substantially reduced, resulting in a net inflow of just $1.7 million. This indicates a decrease in confidence among short sellers.

Despite ongoing concerns, Ethereum struggled last week, witnessing outflows of $7.4 million, making it the sole altcoin to experience a downturn. This stands in sharp contrast to Solana, which saw a substantial $15.5 million influx during the same period. This surge brings Solana’s year-to-date inflows to an impressive $74 million, constituting a substantial 47% of the total Assets under Management (AuM).

The popularity and investment in digital assets are increasing day by day. However, it is still being determined whether the cautious approach of investors towards these assets will continue or not. It remains to be seen if the market’s dynamism will lead to new trends or opportunities in the upcoming weeks.

Related Reading: |Bitcoin’s Hashrate Distribution Surges: Public Miners Claim 27% Share In Q3-2023

Solana Becomes The Most Loved Altcoin Of 2023- Report

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Amidst a lull in the crypto landscape, there’s one altcoin that has defied the prevailing slumber. Solana once hailed as the “Ethereum killer,” has emerged as the darling of institutional interest, outshining its peers in a time marked by stagnation. In a recent report, James Butterfill, head of research for CoinShares, dubbed Solana the “most-loved altcoin of the year,” and the numbers back up the claim.

Solana
Solana Becomes The Most Loved Altcoin Of 2023- Report 9

SOL’s journey in 2023 has been nothing short of spectacular. With a staggering 27 weeks of inflows and a mere four weeks of outflows, this digital asset has consistently proven its worth In a span of a mere seven days, institutions poured in $5 million, propelling the token’s reputation as the choice of investors. What sets Solana apart? Butterfill cites its resurgence to strategic partnerships, notably with financial giant Visa, coupled with its ability to offer lightning-fast and cost-effective payments.

TronWeekly expressed a similar viewpoint, highlighting that the altcoin recently managed to surpass Cardano [ADA], claiming the esteemed position of the 8th largest cryptocurrency by market capitalization. Additionally, the prominent e-commerce entity Shopify integrated the SOL blockchain into its system for processing cryptocurrency payments, garnering significant interest from both the traditional financial sector and the cryptocurrency community.

Solana
Image Credit: defillama

The Solana network isn’t just attracting attention; it’s commanding it. Recently, it hit its highest Total Value Locked [TVL] of the year, soaring to an impressive $335.73 million, according to DefiLlama. The surge in TVL reflects growing user deposits, indicating heightened interest.

Solana’s Price Taps 6-Week High

As if that weren’t enough, Solana’s native token, SOL, witnessed a remarkable surge, trading at a remarkable 6-week high of $24.2, marking a 23% surge over the past month. On the weekly indices, SOL experienced a notable increase of 25%.

While other crypto assets might be in a state of dormancy, Solana’s strategic alliances, coupled with its unparalleled efficiency in transactions, have endeared it to investors worldwide. In a crypto world where excitement can sometimes wane, the SOL blockchain remains a testament to the enduring power of technological ingenuity and strategic partnerships. As institutional interest continues to grow, Solana’s journey is far from over—it’s merely just begun.

 

Bitcoin’s Recent Price Plunge: Insights From CoinShares James Butterfill

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In the wake of Bitcoin’s abrupt slide below the $25,000 mark, the cryptocurrency market is grappling with myriad explanations for this downward spiral. James Butterfill, the Head of Research at CoinShares, has offered an in-depth analysis that sheds light on the intricate underpinnings of this decline, moving beyond the surface-level conjectures tied to SpaceX’s financial maneuvers.

Amidst the market’s recovery efforts, James Butterfill’s insights come as a breath of fresh air, providing a multifaceted perspective on the recent Bitcoin price crash. His analysis shared through a tweet that reads, “Our thoughts on what’s behind the recent Bitcoin price crash,” delves deep into the dynamics that contributed to this downturn.

One of the primary factors identified by Butterfill is the market’s recalibrated expectations concerning the SEC’s stance on approving a spot ETF for BTC. This crash, he posits, could very well be prompted by the market’s realization that the approval of a Bitcoin ETF in the US might not be as imminent as initially hoped.

Bitcoin’s Roller-Coaster Ride: Butterfill’s Insights

Butterfill doesn’t stop there. He points to global macroeconomic trends, particularly in Asia, especially China. The specter of a growing economic downturn and deflation in China casts a shadow, potentially impacting Bitcoin’s fate, albeit in a complex manner. China’s financial health, being a formidable influence on the global stage, resonates within the cryptocurrency sphere.

A liquidity crunch surfaces as another contributing element, with BTC’s current trading volumes markedly lower than earlier. This, combined with historical patterns of low volatility preceding significant price movements, paints a picture of a market on the edge of volatility.

While the attention has turned to SpaceX’s recent $373 million BTC write-down, Butterfill emphasizes the significance of this event within a larger macroeconomic context. He points to the surge in 30-year rates, the highest in two decades, which could potentially precede a broader crash across various asset classes, with Bitcoin often acting as a precursor.

CoinShares’ James Butterfill navigates the intricate landscape of Bitcoin’s price dynamics. The interplay of regulatory decisions, global economic trends, market liquidity, and singular events like SpaceX’s disclosures underscores the multifaceted nature of these price movements.

As investors grapple with the aftermath of this significant price plunge, one thing is sure, the cryptocurrency market remains a complex tapestry of interconnected factors, each contributing to the intricate dance of Bitcoin’s value on the global stage.

Related Reading:| Bitcoin Take A Plunge, Triggering $1B Liquidation Frenzy In Just 12 Hours

Bitcoin’s Self Custody Trend Continues, Supply On Exchanges Hits Lowest Level Since 2018

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Santiment, a crypto data analytics firm, recently revealed that the movement of Bitcoin’s supply into self-custody is ongoing. Despite the drop in BTC’s price below $30,000 last week, the market has remained relatively calm, with no signs of panic selling or fear, uncertainty, and doubt (FUD) dominating the sentiment. This observation comes as a relief to investors who were concerned about a potential wave of sell-offs.

According to the data provided by Santiment, a total of 1.17 million BTC is currently held on exchanges. It marks the lowest amount of BTC held on exchanges since November 2018. The trend of users moving their Bitcoin into self-custody indicates a growing confidence among investors in securing their assets outside exchange platforms, potentially for long-term holding or security reasons.

Meanwhile­, CoinShares, a well-known digital asset inve­stment firm, recently publishe­d a report revealing that the­re has been a minor outflow of funds totaling $6.5 million from digital asse­t investment products. This comes afte­r four consecutive wee­ks of inflows which amounted to an impressive sum of $742 million inve­sted.

Bitcoin Continues To Be The Center of Attention

The primary focus of inve­stors remained on Bitcoin, aligning with rece­nt market trends. According to the CoinShare­s report, there we­re outflows of $13 million from BTC investment products.

Short Bitcoin investme­nt products have experie­nced outflows for the 13th consecutive­ week, amounting to a total of $5.5 million. This observation pote­ntially indicates a shift in sentiment among inve­stors who previously placed bets on BTC’s price­ decline.

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CoinShares’ report also highlighted that the total assets under management (AuM) of short bitcoin investment products have significantly declined. At its peak, short Bitcoin AuM represented 1.3% of the total Bitcoin investment products. 

However, this figure has dropped sharply to just 0.4%, the lowest since June 2022. This decline in short positions could suggest a reduced expectation of further price declines in the near term. Nevertheless, the recent trends in BTC’s supply distribution and investment product flows indicate a notable shift in investor behavior and sentiment.

Related Reading | Shiba Inu Might Help Twitter Usher In The X Age: Here’s How

XRP’s $600k Fund Inflows Is Highest In 2023

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XRP experienced one of the biggest increases in fund inflows for the cryptocurrency this year as funds totaling $600k were poured into these investments, giving it a significant boost.

As per latest CoinShares report, the figure is one of the highest for the cryptocurrency this year.

Over $2 billion was invested in the XRP market, showing that investors are still optimistic. Due to this, the market capitalization has increased to $27.19 billion, which is a massive 10% gain from the $24.56 billion recorded on May 27.

The inflow of capital over the week subsequently stirred XRP’s price which maintained its position above the $0.5 level.

This capital inflow coincided with increased onchain activity. On May 28, up to 490.35K addresses interacted with the network, as reported by TronWeekly. The network experienced the biggest increase of 871.98K addresses on 18 March.

Another crucial reason could be attributed to the buzz created following the ruling by presiding judge Annalisa Torres asking the SEC to produce documents related to a 2018 speech by William Hinman, the former Director of Corporation Finance for the SEC. 

In related news, Whale Alert spotted the movement of 700 million XRP valued at roughly $360 million into Ripple escrow.

On the first of every new month, Ripple has continuously released a sizeable number of tokens and has been doing this for over five years now.

For those new, the release is a part of Ripple’s ongoing, monthly distribution plan that began in December 2017.

The San-Franscisco-based payment firm still maintains a significant number of tokens in escrow after all this time. The crypto market will soon see the arrival of XRP valued at hundreds of millions.

XRP Is Now 11 Years Old

Initially, these accounts controlled 55% of the 99.9 billion XRP tokens in circulation; but, as a result of the gradual unlocking process, that ratio has now dropped to 41.9%.

The sixth-largest cryptocurrency by market capitalization completed 11 years. 

During its decade-old journey, the price of XRP had its share of ups and downs. Notably, the token marked its biggest surge of approximately 32,000% in the 2017 bull market, reaching a record peak of $3.84 on Jan. 4, 2018.

However, after the Ripple-SEC case was filed in December 2020, the price plummeted to $0.16.

The XRP price is currently rising as anticipation grows for the outcome of the Ripple-SEC lawsuit. Since May 24, XRP has remained in the green most of the time and is trading at $0.535 at the time of writing, up 1.72% over the previous 24 hours and 10% over the previous week.