Medha Singh, Lisa Pauline Mattackal

(Reuters] – The first signs that there is a thaw in crypto winter are beginning to emerge as it creeps into June.

Based on the volume of funds going into the listed crypto funds (which only a fraction of the market, but which are highly regarded by institutional and retail investors alike), some investors now believe bitcoin has bottomed out.

The overall flow into such funds was positive with an average weekly inflow of $66.5million. This reverses a poor April, when there were a $49.6 million weekly outflow, according to CryptoCompare.

“It is largely institutional and to some degree retail investors who recognize that the pain has already been endured and that we’re closer at the bottom than the top,” stated Ben McMillan chief investment officer for Arizona’s IDX Digital Assets.

He said that if you are looking to invest in crypto at these levels, some volatility may be worth the long-term benefits. A lot of institutional investors now see crypto as having long-term potential for growth.

However, it’s difficult to determine if these tentative trends will persist or whether they will become a more widespread trend in the larger market.

People will be hesitant to invest in crypto again after being so heavily impacted by concerns about global monetary tightening. About half has disappeared since November’s peak. It is currently at about $30,000 per month and down by almost a third of what it was in 2022.

Fund data shows some investors returning to crypto, but not because of the perceived security and liquidity of exchange-traded product (ETP).

Kraken Intelligence reports that the assets under management for several ETFs are up in bitcoin-futures over the last week. The assets of the ProShares Bitcoin Strategy ETF’s have grown 6%, while those of the Global X Blockchain & Bitcoin Strategy ETF and VanEck Bitcoin Strategy ETF have climbed over 3%.

By comparison, ProShares bitcoin fund experienced outflows in excess of $127 million during April.

Arcane Research in Norway found that the bullish trend continues into June. The global bitcoin ETP portfolio reached a record high of 205.008 bitcoin within two days.

Vetle Lunde, an Arcane analyst said that this is a sign of what’s yet to come.

Investors are becoming more selective and cautious. Bitcoin funds only have seen inflows, while ethereum funds and other crypto funds still saw outflows.

STILL IN RED

Let’s not forget that while some funds might be making a comeback, many have seen poor returns as the cryptocurrency market plummeted.

Morningstar reports that U.S. funds for digital assets have experienced losses of 46% in average over 2022. These gains were 22% in May.

CryptoCompare reported that all listed digital asset investments products lost money during May. Grayscale’s Digital Large Cap Fund, which suffered a 38.5% drop, was the worst performing.

“Bitcoin has been rangebound in concert with the broader market activity of late, investors are looking for a bottom and are uncertain where that is,” said Jack McDonald, CEO of PolySign, which specializes in digital asset custody solutions for institutional investors.

Grayscale Bitcoin Trust shares are being traded at 29% off net asset value. This is the steepest discount it has seen since its inception, and a sign of low demand.

Market watchers believe that crypto fund inflows will continue to be subdued despite the increase in May. This is until regulator and macroeconomic risk are clearer.

McMillan, IDX said that they are waiting on a strong conviction bid for the market to recover. There’s still much wood to be chopped on the macro front.