Bitcoin Dominates Institutional Inflows on the Back of Recent BTC Price Rally

According to the latest edition of CoinShares’ Digital Asset Fund Flows Weekly Report, digital asset investment products received a total of $326 million in inflows, marking the highest weekly influx since July 2022.

The asset manager speculated that the rising optimism from investors that the US Securities and Exchange Commission would approve a spot-based Bitcoin ETF in the country could be the reason behind the massive inflows.

Inflows Spike

Bitcoin dominated the inflows, accounting for 90% of the total at $296 million. Additionally, the recent surge in prices led to an influx of $15 million into short Bitcoin investment products as well. Ethereum, on the other hand, saw another $6 million of outflows as investor sentiment remained sour.

Meanwhile, Solana led the pack among altcoins with inflows of $24 million. CryptoPotato had earlier reported that Solana-based products stood out among its rivals and posted the most significant AUM surge during the period, rising by more than 74% to $140 million in October.

From a regional standpoint, just 12% of the total flows, amounting to $38 million, originated from the United States. The most substantial inflows originated from Canada, Germany, and Switzerland, with investments of $134 million, $82 million, and $50 million, respectively.

Notably, Asia recorded its highest weekly inflows at $28 million, while the region’s total assets under management reached $37.8 billion, marking the highest level since May 2022.

“Month-to-date inflows are now close to half a billion dollars. While positive for Bitcoin, this weekly inflow ranks as only the 21st largest on record, suggesting continued restraint amongst investors, although we do believe a spot-based ETF is now highly likely in the coming months, and will represent a step-change for the industry from a regulatory perspective.”

Bitcoin’s $40,000 Mark Crucial

In a Monday update, James Butterfill, the firm’s Head of Research, doubled down on the strength displayed by the market in recent weeks. Butterfill said that a Bitcoin surge to $40,000 would indicate a “transformative shift” in the crypto-asset’s “regulatory perception,” which would set the stage for Bitcoin’s mainstream acceptance paralleling established asset classes such as Gold.

Given the current momentum, Butterfill believes that this milestone could be achieved as early as this week. However, it’s crucial to approach this prediction with caution. Any setbacks to the projected early 2024 timeline for spot ETFs could reverse the price trend, potentially dragging it back to the $20,000 range, the exec added.

Furthermore, if Bitcoin can maintain the $40,000 level over an extended period, it would likely signify the beginning of a new bullish phase for the cryptocurrency market. This shift would represent a significant change in the media narrative surrounding Bitcoin and the broader crypto ecosystem, according to the CoinShares’ exec.