February 14, 2024

Institutional Investors Boost Crypto Holdings to a Two-Year High

Institutional investors have significantly increased their exposure to digital assets, with holdings reaching $59 billion, marking the highest level seen since February 2022.

The crypto landscape is witnessing a significant surge in institutional participation, with major financial entities now collectively managing a staggering $59 billion in digital assets.

This milestone represents a notable uptick from the previous week, showcasing a robust resurgence in institutional interest in the crypto market.

This marks the highest level since February 2022, when institutional holdings hovered around $60.9 billion, according to the latest Digital Asset Fund Flows Weekly Report from CoinShares.

James Butterfill, Head of Research at CoinShares, shed light on the trend, stating:

“From all the conversations we have had with many clients, they are buying for diversification and enhancing risk-adjusted returns in portfolios.”

Over the past week, inflows surged past the $1.1 billion mark, with bitcoin dominating 98% of total flows. The resurgence in bitcoin's value, briefly surpassing $50,000 for the first time since December 2021, reflects a remarkable 16% increase over a 7-day period.

The overwhelming preference for bitcoin among institutional investors underscores a significant appetite for spot bitcoin ETFs from Wall Street and its clientele, signaling a notable shift towards embracing digital asset exposure within traditional financial circles.

Butterfill highlighted CoinShares' quarterly survey, tracking $1 trillion of assets under management (AUM), revealing that 27% of investors engage in crypto for speculative purposes, while over 40% are driven by the desire for diversification and exposure to blockchain technology.

However, altcoins witnessed comparatively muted interest from institutional investors in the preceding week.

Ether (ETH) managed to attract $16.5 million worth of inflows, contributing to a yearly net flow total of $13 million. Similarly, Cardano (ADA) accrued $6.1 million from large entities.

Butterfill also touched upon the potential for a spot ether ETF, with the first SEC approval deadline slated for May 2024. He expressed optimism surrounding the anticipated launch, citing bitcoin's outperformance of ether post the introduction of spot ETFs on January 11.

"Investors are eagerly awaiting the potential opportunities that may arise," he remarked, underscoring the significant market anticipation surrounding the potential Ethereum based ETF launch.

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