- Institutional demand for crypto-related investment products fell 59% last week as Bitcoin trades sideways.
- Assets under management of major institutional investment products reached a record high of $ 57 billion.
- Investors are looking to diversify as appetite for Ethereum increased in early February.
Institutional demand for cryptocurrency-related products declined significantly in the United States for the week ending March 20. Despite the drop in admissions to the United States, European and Canadian institutions have maintained their appetites.
Bitcoin-related products drop 35%
Digital asset investment manager CoinShares saw a roughly 35% drop in trading volumes in Bitcoin-related products last week to $ 713 million per day, down from $ 1.1 billion per day for 2021. However, the cryptocurrency itself continued to trade at a volume of $ 11.8 billion. per day in the United States.
According to CoinShares, the combined entries in institutional products totaled $ 99 million for the week ending March 20. Institutional demand fell 59% from the previous week, which recorded $ 242 million.
There appears to be a regional divide, with the United States seeing lower demand, while European and Canadian institutions have continued to buy. The reduced appetite for digital asset funds may reflect Bitcoin’s price uncertainty as the cryptocurrency continued to trade sideways between $ 54,000 and $ 61,000 last week. The cabinet noted:
Since February’s price highs and heightened volatility, we have seen a steady decline in investor appetite.
Despite the drop in demand, assets under management of major institutional investment products hit a new high of $ 57 billion.
Investors have set their sights on Bitcoin, as the major currency’s products absorbed most of the inflows, while Ethereum and Polkadot-related products lagged behind. Other altcoin-related investment products, including Binance, Ripple, and Bitcoin Cash, have seen very little activity, according to CoinShares.
As of March 22, Grayscale continues to be the industry leader in institutional crypto investing, with a total of $ 44.2 billion in assets under management.
Institutions continue to focus on BTC
Mathew McDermott, head of digital assets at Goldman Sachs, conducted a cryptocurrency investigation revealing that all of his “discussions with institutional clients are really Bitcoin-focused.”
40% of customers are already exposed to cryptocurrencies, whether in physical form through derivatives, securities products or other offerings. McDermott further noted that the main drivers for investing in Bitcoin are negative rates and general fears associated with devaluation of assets.
The Goldman Sachs executive further pointed out that 41% of clients already exposed to crypto own physical or cash digital assets. Additionally, 61% of these institutional clients expect their cryptocurrency holdings to increase over the next year.
Large US bank Morgan Stanley also recently offered its clients access to three funds that allow Bitcoin exposure, citing an influx of client inquiries.
Ethereum-based investment products are growing in popularity
Prior to the launch of Ether futures on the Chicago Mercantile Exchange, institutional investors heavily piled up ETH products, which accounted for 80% of entries for the week ended February 8.
CoinShares suggested that investors were looking to diversify and felt more comfortable with Ethereum’s fundamentals. In the same week, Bitcoin had its weakest entries since all-time highs recorded in early January.