Institutional Investors Accelerate Cryptocurrency Profit Taking

Institutional Investors Accelerate Cryptocurrency Profit Taking

January 12, 2021

CoinShares, a cryptocurrency asset management firm, published a report yesterday and mentioned that there is enough evidence of potential profit-taking by the institutional investors as some crypto investment products witnessed significant outflows during the last week.

According to the published report, the cryptocurrency market attracted just $29 million fund inflows last week, a massive 97% drop from $1.09 billion inflows in the week before Christmas as institutional investors started profit-taking in 2021. Additionally, CoinShares mentioned that the total cryptocurrency assets under management now stand at around $34.4 billion as the recent price rally pushed the value of crypto investment products to a record high.

“There has been much greater investment product participation in the recent price rises as their respected volumes averaged 10.5% of total Bitcoin trading volumes. These represent levels not witnessed since December 2017, but that is likely where the similarities end. We have seen much greater investor participation this time round with net new assets at US$8.2bn compared to only US$534m in December 2017,” the official report states.

Moreover, CoinShares highlighted that despite some challenges, the weekly crypto fund inflows have remained positive since May 2019 as investors started accepting cryptocurrency products as a store of value.

Cryptocurrency Funds

The total value of cryptocurrency assets under management across different financial firms gained significant value during 2020, but it seems like institutional investors are booking some profits in 2021. The trend has been evident in the latest data of Grayscale, the world’s largest asset manager. According to Bybt, a crypto analytics company, Grayscale’s Bitcoin, Ethereum, Litecoin, and BCH fund witnessed outflows during the last seven days.

The total value of Grayscale’s cryptocurrency assets under management dropped from $28.4 billion on 9 January to $24.5 billion on 12 January. The recent correction in leading digital assets accelerated the drop in the company’s total value of digital currencies under management. Bitcoin remained the top holding of Grayscale with a total value of more than $20 billion.

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