Institutional crypto managers are holding a record amount of digital assets, despite a decline in US inflows, CoinShares says

Institutional crypto managers are holding a record amount of digital assets, despite a decline in US inflows, CoinShares says

A visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course’s graph Chesnot/Getty Images

Total assets under management held by crypto managers have reached a record $57 billion, according to digital asset investment house CoinShares.

US investors appear less keen on crypto, but European and Canadian appetite remains strong, the report shows.

Bitcoin trading volume also declined by $387 million last week, it said.

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Institutional crypto managers are now managing a record $57 billion in assets, according to digital asset investment firm CoinShares. Last week, net inflows totalled $73 million as minor outflows were offset by incoming investments, a weekly report by the company showed.

Grayscale Investments, the owner of the world’s largest bitcoin fund, still manages over three quarters of that record total, with around $44.6 billion, well ahead of CoinShares, which has the second-largest holding, with just shy of $5 billion in assets under management.

The vast majority of inflows in the latest week went into bitcoin, totaling $85 million. Ethereum’s ether token and Polkadot were left far behind in second and third place respectively, according to the report. Ether saw inflows of $8 million and Polkadot, $2 million. Volumes traded in bitcoin-based investment products eased back by $387 million to $713 million a day, compared to a daily $1.1 billion for 2021.

“This has not been reflected overall for bitcoin, where trading volumes on trusted exchanges remain at $11.8 billion per day,” CoinShares said in its weekly report.

Bitcoin’s value has declined in recent weeks and is currently trading around $54,945. It traded at a record above $61,000 earlier in March.

Crypto analysts are increasingly speaking of the potential for a steeper correction in price and some have said indicators are pointing to bitcoin being at a later stage in the bull market.

Other digital assets have followed a similar pattern in the last few months. Following the price highs that a number of digital assets reached in February and their recent volatility, there has been a decline in investor appetite, CoinShares said. However, “there seems to be a regional divide, with declining appetite from the United States and sustained appetite from Europe and Canada,” the report added.

The volatility of digital assets is something that does concern banks, regulators and governments. Federal Reserve Chairman Jerome Powell stated on Monday that cryptocurrencies are too volatile to replace the dollar and the SEC has not yet approved any bitcoin ETFs, despite the agency’s cryptocurrency commissioner stating that this has caused them difficulties.

Bitcoin tops $57,000 after Tesla starts accepting crypto asset as payment

Prices of the world’s oldest cryptocurrency, bitcoin, regained the $57,000 level on Wednesday after Tesla chief Elon Musk announced that people can now start buying the company’s electric vehicles using the digital asset.

According to Musk, Tesla is using internal and open-source software and operates bitcoin nodes directly. “Bitcoin paid to Tesla will be retained as bitcoin, not converted to fiat currency," Musk tweeted. The payment facility has been rolled out only in the US as of now and will be made available outside of the country later this year.

Bitcoin, which was trading in the red below the $54,000 level spurted past the $57,000 level reacting to the Musk’s announcement. At 6.15pm IST, the digital asset was trading 3.2% higher at $56,840.72 after moving in a wide range of $53,611.02-57,239.10 over the past 24 hours, as per CoinGecko.

On 9 February, bitcoin had surged more than 18% in a day after the US electric-car maker Tesla had disclosed $1.5 billion holding in bitcoin and announced its plan to start accepting it as a payment.

Tesla’s latest announcement has come as a major boost for the cryptocurrency, which has been on a downwards slope over the past few days.

Bitcoin on Tuesday had slumped 5.8%, its worst single day fall in almost a month. “Experts believe that the drop can be partly attributed to traders closing their position before the expiration date of option-market kick, which will kick in on Friday," said Ashish Singhal, chief executive officer and co-founder, CoinSwitch Kuber, a crypto investment platform.

The market’s drift lower over the past week has some market participants concerned about incremental downside price action as we head into April.

However, there are some bullish calls as well. “Aside from demand holding firm and price hovering around levels seen earlier in the month, market participants continue to see great promise in the fact that the supply of crypto assets on exchanges continues to dwindle week-by-week. As market participants often move coins onto exchanges to liquidate their holdings, it’s believed that a falling percentage of a coin’s circulating supply that are on exchanges is inherently bullish; it is indicative of market participants moving coins into cold storage and thus a less immediately marketable supply of coins available in the market. This creates a supply-demand imbalance that leads to a higher price," global crypto exchange Kraken said in a note.

Meanwhile, other major cryptocurrencies such as ethereum, tether and cardano were trading up to 2% in the green.

“The newsmaker of the day is tether, which has become the third-largest cryptocurrency in the world by market cap, ahead of Binance coin and cardano. Moreover, it is important to note that despite the recent drop from an all-time high of $62,000, bitcoin is still up 700% compared with last year. In the new financial year, investors will begin strategizing their portfolio and we may see a surge in demand of crypto assets in the coming months," said Shivam Thakral, CEO, BuyUcoin.

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