Cryptocurrency mutual fund inflows surged last week, evoking cautious optimism that investors are expanding their exposure to digital assets, despite geopolitical uncertainty and monetary tightening by central banks.
Digital asset investment products registered cumulative inflows of $127 million for the week ending March 6, according to CoinShares data. A CoinShares representative told Coin-Crypto that this was the highest weekly inflow since December 12, 2021. The increase was also significantly higher than the $36 million in inflow recorded the previous week.
As in previous weeks, Bitcoin (BTC) products recorded the largest weekly inflow of $95 million. Bitcoin cash flows have increased for seven consecutive weeks. Ether (ETH) funds saw inflows totaling $25 million, the largest in 13 weeks. Premium income in multi-asset investment products also increased by $8.6 million.
Year-to-date, Bitcoin funds have seen a cumulative inflow of $166 million.
Institutions are optimistic about #Bitcoin†
The amount of BTC held by public companies has gained significant market share over that of spot ETFs. https://t.co/DZP2AlMXlh
— CoinTelegraph (@Coin-Crypto) January 3, 2022
Since the onset of the Covid-19 pandemic, crypto markets have shown a higher correlation with public equities, meaning digital assets have been negatively impacted in recent months by the shift from legacy finance to a more risky environment. That shift was largely driven by the Federal Reserve’s plans to normalize monetary policy. Recent events in Ukraine have also negatively impacted the demand for higher risk investments, including crypto.
Related: Rate Increases, CPI, and War in Europe – 5 Things to Watch in Bitcoin This Week
Bitcoin is trading under the 11-year trend – a region in which it has lived for only 12.7% of its history. Source: Pantera Capital
However, according to crypto hedge fund Pantera Capital, the correlation between stocks and crypto is somewhat short-lived. As CEO Dan Morehead notedSince 2010, correlations between Bitcoin and the S&P 500 typically peak over a two-month period before decoupling. Morehead recorded six downward trends in the S&P 500 during that period.