- Crypto fund flows have reached record heights in the first quarter of this year.
- Experts attribute the meteoric rise to general positive sentiments among private players in the industry.
Cryptocurrencies have seen a frenzy of investments in the recent past. Growth is speculated to only increase in the coming months. Though virtual tokens are traditionally considered to be highly volatile stock options, the recent growth has brought in many amateur investors into its fold.
The Bitcoin “run-off” effect
Though Bitcoin is just one speck among the vast realm that is cryptocurrencies, it seems to have taken the lead when it comes to the public’s perception of blockchain technologies. Simply put, what affects Bitcoin is bound to affect all the other cryptocurrencies. February’s bullish BTC run in the market can be considered as a prime example to showcase its “run-off” effect. As high profile private companies such as Tesla and MicroStrategy poured in huge investments into BTC, its price touched record heights of about $60,000. This led to a more positive outlook on other tokens especially Ethereum’s Ether and Ripple’s XRP including others, thus improving their market positions too. But this can also be seen as a “ruin-off” effect as BTC’s lows also negatively impact other cryptos.
Markets strong despite minor blows
In a report published by CoinShares, a digital asset investment firm, this financial year’s first quarter has already seen inflows into crypto ETPs of over $4.2 billion. Exchange-Traded Products (ETPs) are natural ways for investors to trade cryptos as securities in existing fiat exchanges rather than in specialized cryptocurrency exchanges. Growth in ETPs was sluggish for the past few quarters, with the last quarter yielding just $3.9 billion.
As of March 12, crypto ETPs peaked at $55.8 billion worth of Assets under Management (AuM) succeeding a positive price action of $242 million. Out of the $55.8 billion, $54.1 billion worth of AuM were passive investment products whereas the rest of about $786 million were active investments. Moreover, Ethereum also attracted a total fund of $113 million last week alone, inline with general positive market sentiments. Bitcoin seems to be the only exception as it experienced almost insignificant outflows of about $39 million, probably due to some investors cashing out with profits.
As evident from this report, the exceptional rise in the future of cryptocurrencies seem evident and secure.
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