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Cryptoverse: The early birds betting bitcoin’s bottoming out

The expression of Bitcoin can be seen in the illustration photograph taken at La Maison du Bitcoin in Paris, France on June 23, 2017. REUTERS / BenoitTessier / File Photo

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June 7 (Reuters)-As the cryptocurrency winter creeps up in June, the first signs of thaw are appearing.

Some investors are betting that Bitcoin is bottoming out, judging by the money going to the listed crypto funds. It represents only a small part of the market, but is popular with institutional investors and retailers.

According to data provider CryptoCompare, overall inflows to such funds turned to plus last month, with an average weekly inflow of $ 66.5 million and an average weekly outflow of $ 49.6 million in April’s misery. It was reversed from the situation.

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Ben McMillan, Chief Investment Officer of IDX Digital Assets, based in Arizona, said: ..

“If you are using cryptocurrencies at these levels, short-term volatility can be worth the long-term rewards,” he added. “Many institutional investors are beginning to see crypto as a source of long-term growth potential.”

However, it is difficult to know if the tentative trend will continue or if the early trends will be replicated to a wider market.

Many also ponder before re-entering the market as cryptocurrencies have been buffeted by concerns over global monetary tightening and rising inflation. Bitcoin has lost about half of its value since its peak in November, declining to one-third in 2022 and slumping at about $ 30,000 a month.

Nonetheless, data from the fund is cryptocurrency, even though some investors are aware of the security of exchange-traded financial products (ETPs) with a promise of higher liquidity and security. Indicates that you are back in currency.

According to Kraken Intelligence, the assets under management of several Bitcoin futures ETFs increased last week. ProShares Bitcoin Strategic ETF Assets Increased 6%, but Global X Blockchain and Bitcoin Strategic ETF Assets (BITS.O) And the VanEck Bitcoin Strategic ETF has risen by more than 3%.

By comparison, ProShares Bitcoin funds saw an outflow of over $ 127 million in April.

The bullish trend continued until June, with global Bitcoin ETP holdings jumping to a record 205,008 Bitcoin in the first two days of the month. Discovered by Norwegian-based cryptographic research firm Arcane Research.

“This is a promising sign of what’s to come,” said Vetle Lunde, an analyst at Arcane.

Only Bitcoin funds received inflows, and Ethereum and other crypto-focused funds still experienced outflows, showing investors being selective and cautious.

Reuters graphics
Reuters graphics

Still in the red

But keep in mind that while the fate of some funds may rise, the crypto market is stagnant, and most funds are recording low returns this year.

According to Morningstar, US digital asset funds have lost an average of 46% so far in 2022 and recorded a loss of 22% in May.

All listed digital asset investment products tracked by CryptoCompare lost in May, with grayscale digital large cap fund products showing the worst performance, down 38.5%.

Jack McDonald, CEO of PolySign, which specializes in digital asset management solutions for institutional investors, said:

Grayscale Bitcoin Trust Stock (GBTC.PK) One of the largest Bitcoin funds with over $ 19 billion in assets is trading at a 29% discount on net worth, the steepest discount since its inception, indicating low demand for products. I am.

And despite the rise in May, many market watchers expect the inflow to cryptocurrencies to remain restrained until macroeconomic and regulatory risks become clearer.

“We are waiting for confident bids to return to the market,” IDX’s McMillan added. “There is still a lot of wood in front of the macro.”

Cryptographic and blockchain ETFs
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Report by Medha Singh and Lisa Pauline Mattackal in Bangalore Edited by Vidya Ranganathan and Pravin Char

Our criteria: Thomson Reuters trusts the principles.

The expressed opinion is that of the author. These do not reflect the views of Reuters News, which under the principle of trust, is committed to integrity, independence and freedom from prejudice.

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