Institutional Investment, Albeit Ethereum, Witness First Inflows in a Month

The week ending January 21 noted the biggest crash of 2021, in which the overall crypto market lost over 18%, which also had an impact on the institutional inflows. Ironically it wasn’t a negative impact as most of the assets under management did not witness any outflows.

Only Ethereum Posts Outflows

For the first time in over five weeks, the total investment in digital assets witnessed a positive flow with total inflows of $14 million. The necessity of breaking this trend was of utmost importance since outflows dominated the market for more than a month. 

The same outflows were highest in more than seven months in the second week of January, close to almost $200 million. Considering that, even $14 million in inflows is a significant relief. 

But not all assets managed to pull in money, as the king of DeFi noticed $15.6 million in outflows. This is unusual because of all the other holdings, including Bitcoin, that witnessed the brunt of the recent crash, only Ethereum suffered institutionally.

The fact that the overall net flows were positive indicates a strong investment interest from investors, which translates to them buying the dip. However, that wasn’t the case with Ethereum.

However, it wasn’t Ethereum alone; certain ETPs too failed to draw in money last week. Leading that band was CoinShares XBT ETP, which registered almost $20 million in outflows.

Following it was the ETC group’s ETF, which posted negative net flows of $4.5 million, totaling its January outflows to $132 million. And even the Purpose ETF witnessed a similar fate losing up to $2 million.

Another institutional investment vehicle sharing these ETFs’ affliction is the Grayscale Bitcoin Trust, trading at its all-time highest discount of 29.87%. Although the GBTC premium has been negative for over nine months now, the crash of January 21 had the asset plummeting.

So Will This Improve if the Market Improves?

That can’t be said with surety since institutional interest isn’t born out of the prevailing trend. We would have witnessed higher outflows than inflows had that been the case. However, if the market continues plunging this week, we might see some heavy players bow out. 

The total market again was down by 2.6% at the time of this report. Some recovery is necessary this week to prevent further outflows.