Bitcoin institutional inflows will exceed $1 billion in 2023 due to a shortage of BTC.
The cryptocurrency market is experiencing a significant surge in institutional investment, with over $1 billion flowing into Bitcoin and altcoins in just under two months. CoinShares, a leading crypto asset management firm, recently reported on the escalating trend, emphasizing the growing appeal of digital assets, especially with the anticipation of the approval of the United States’ first spot exchange-traded fund (ETF).
Crypto Market Overview:
Since November 2022, the total crypto market cap has witnessed a remarkable increase of $600 billion, as confirmed by data from TradingView. This surge is attributed to a growing excitement surrounding the potential approval of a Bitcoin ETF in the United States.
Institutional Inflows:
Over the past two months, there has been a substantial uptick in funds allocated to crypto investment products. CoinShares revealed that digital asset investment products saw inflows totaling $293 million in the last week alone, marking a seven-week streak that surpassed the $1 billion mark. Year-to-date, inflows have reached $1.14 billion, making it the third-highest yearly inflow on record.
Assets Under Management (AUM):
Crypto exchange-traded products (ETPs) have experienced significant growth in AUM, nearly doubling since the beginning of the year and gaining almost 10% in the past week alone. The total AUM now stands at $44.3 billion, reaching levels not seen since the major crypto fund failures in May 2022.
Bitcoin Dominance:
Bitcoin remains a primary focus for institutional investors, with inflows totaling $240 million in the past week. Year-to-date, Bitcoin inflows have reached $1.08 billion, reflecting a positive sentiment among investors. In contrast, short positions in Bitcoin saw outflows of $7 million.
Bitcoin Supply Dynamics:
The increased institutional interest prompted on-chain analytics firm Glassnode to reassess Bitcoin’s supply dynamics. With the next block subsidy halving just five months away, BTC being stored for the long term now exceeds the amount mined by 2.4 times. This trend is highlighted in Glassnode’s “The Week On-Chain” newsletter, emphasizing the upcoming halving event as a crucial milestone for Bitcoin.
Adoption Signals:
Philip Swift, creator of the statistics platform Look Into Bitcoin, pointed out the increasing number of wallet entities, both large and small, as a strong signal of adoption. He stated, “This is what adoption looks like,” underlining the positive trajectory of Bitcoin and the broader cryptocurrency market.
Final Thoughts:
The influx of institutional capital into the cryptocurrency market, particularly Bitcoin, highlights a renewed confidence in digital assets. With growing AUM, positive sentiment, and favorable supply dynamics, the market appears poised for continued growth. However, investors should exercise caution and conduct thorough research before making any investment decisions, as the crypto market inherently involves risks.
