Is Bitcoin Bottoming Out? -Breaking
- Since May, the exchange-traded fund has seen an increase in money raising.
- The average weekly inflows to these BTC mutual funds was $66.5 million.
- Global bitcoin ETP holdings soared to 205,008 BTC in the first week.
Some crypto investors’ bets on (BTC) seem to indicate that the cryptocurrency is starting to bottom out. It seems that crypto winter is over, as the volume of money going to licensed crypto funds keeps growing.
Although cryptocurrency trading via these investment funds is a tiny fraction of the overall market, they represent a large portion of it in the way that both retail and institutional players are involved.
The average weekly inflows into mutual funds increased by $66.5million since May, compared with a April of gray that had an average outflow of $49.6million, CryptoCompare data cited Reuters.
Ben McMillan from IDX Digital Assets, Arizona’s investment director, made these comments:
“It’s largely institutional and to some extent retail investors recognizing that the pain has been over and we’re closer to the bottom than the top.”
He added that “if you enter crypto at these levels, a little short-term volatility can pay off in the long run. Institutional investors have begun to view crypto as an opportunity for long-term upside.
However, it is too early to know if this trend will expand to the larger market. Also, whether BTC gambling will continue to grow money flows to funds.
BTC’s week started well. According to CoinMarketCap on Tuesday, the cryptocurrency traded at $31,531, but then fell to open the next day with a loss 5.85% and settle at $29 521.94 at 9.13. (GMT-4).
The Moment of Maximum Danger
Analysts have cautioned that crypto markets are at maximum risk. This could also mean higher profits. If indeed, the traders of registered crypto funds were right, then the crypto winter will give way to an incessant increase for digital currency.
Bitcoin’s value has fallen half since its highs in November 2021 when it was above $69,000. Market manipulation and statements by Elon Musk, among others, are the main reasons for this decline.
BTC, which was less than one dollar in 2009, was the most valuable digital currency. It was also an excellent investment asset. BTC experienced a 20% increase over the previous decade. The average year-over-year return was 230%. There were a few exceptions like 2013, 2018 and 2013.
BTC ETFs are preferred by investors
ETPs, which offer greater security and liquidity to investors, seem to fuel cryptocurrency’s investment flows. Kraken Intelligence has reported that the number of assets held by Bitcoin futures ETFs has increased over the past week.
According to the report, the ProShares Bitcoin Strategy ETF assets grew 6%, while Global X Blockchain & Bitcoin Strategy ETF (BITS.O) and VanEck Bitcoin Strategy ETF assets increased 3%. ProShares just reported an April outflow exceeding $127 million.
Arcane Research released a report that revealed global Bitcoin ETP holdings hit a record high of 205.008 BTC during the first week in June.
For the analyst at the Norwegian research company Vetle Lunde, “This is a promising sign of what’s to come.”
It’s clear, however, that many investors operate with extreme caution and choose only the best crypto assets in the current range of risk.
It is important to note that BTC ETFs were chosen by only a few investors. The exits of funds that are focused solely on cryptos and others will continue to be the case.
Grayscale Bitcoin Trust is the only losing fund
While digital asset funds are receiving more investment, some have not been able to make good returns this year due to the 2022 crypto crash. According to Morningstar data, US funds have lost an average of 46% so far in 2018. The losses registered in the last month were 22%.
All investment products that were listed by CryptoCompare as crypto assets had suffered significant losses in May. The worst performing product during the period was the digital large-cap investment fund Grayscale Bitcoin Trust which closed 38.5% lower.
The performance of this product from Grayscale Investments, the world’s largest digital currency asset manager, pushed the company’s shares back and are currently trading 29% below net asset value.
PolySign CEO Jack McDonald explained that “Bitcoin has been fluctuating in line with broader market activity lately, investors are looking for the bottom and don’t know where it is.”
The expectation is that the BTC exchange traded funds will continue to see no sudden changes in their money flow, even though they saw an increase in inflows last month. Market sentiment has remained subdued until clearer signals are received from the Federal Reserve regarding interest rates and plans for industry regulation.
IDX’s McMillan commented that they are “waiting for the offer to return to the markets with high credibility. On the macro front, there is still a lot to be split.”