Tue 04/06/2024 ▪
5
min reading ▪ acc
The month of May 2024 represents a key period in the history of crypto investments. A massive inflow of capital reaching $2 billion into crypto funds was observed, which is a clear sign of investor confidence in these digital assets. This phenomenon, mainly supported by the performance of Bitcoin (BTC) and Ether (ETH), represents a new stage in the acceptance and recognition of cryptocurrencies in the global financial market.
Historical capital inflow
The inflow of $2 billion into crypto funds in May did not happen all at once, but was evenly spread over four weeks of the month.
It saw significant inflows every week, peaking at $185 million during the last week of May. This upward trend reflects the growing interest of investors in digital assets, despite the fluctuations and uncertainties that often surround this market.
Data provided by the CoinShares Digital Asset Fund Flows report highlights that the majority of capital is coming from the United States, with $130 million contributed over the past week.
This figure contrasts with capital outflows recorded by historical issuers of $260 million. This dichotomy reflects rapid changes in investor preferences and appetite for new financial instruments.
Bitcoin at the top of crypto investment flows
Bitcoin dominated investment flows in May, recording a weekly inflow of $148 million, according to Coinshares.
This performance confirms BTC’s status as a reference decentralized currency that attracts a growing number of investors looking to diversify their portfolios.
Meanwhile, short bitcoin funds saw an outflow of $3.5 million, bringing the monthly outflow to $12.5 million. This trend suggests bullish sentiment among investors who are ready to bet on BTC’s continued growth.
Ether, the second largest cryptocurrency by capitalization, also saw an improvement. With a weekly inflow of $33.5 million and a monthly total of $21.6 million, ETH benefited from the approval of ETFs (exchange-traded funds) in the United States.
The approval reversed sentiment among institutional investors, who had pulled $200 million from ETH exchange-traded products in previous weeks.
Diversification and challenges of Multi-Asset funds
In addition to these two giants, other cryptocurrencies such as Solana (SOL) have also attracted capital. Solana saw $5.8 million in the last week of May, bringing its monthly total to $24.8 million. This performance demonstrates investor interest in alternative and promising blockchain projects.
However, not all market segments were equally successful. Multi-asset funds fared poorly, with weekly outflows of $2.7 million and monthly outflows of $12.2 million. This trend suggests a possible hesitancy on the part of investors to commit to diversified funds, preferring to focus on specific assets that they see as more promising.
The approval of the Ethereum ETF by the US SEC on May 23, 2024 had a significant impact. Since then, more than $3 billion worth of ETH has been withdrawn from centralized exchanges, indicating a potential supply shock to come. These developments could affect ETH prices and market dynamics in the coming months.
The month of May 2024 will go down in history as a period of great inflow of capital into crypto funds. With massive inflows reaching $2 billion, the crypto market continues to woo and attract a wide range of investors. The dominance of Bitcoin and Ether, as well as growing interest in other digital assets, paint a promising future for cryptocurrencies.
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Fascinated by Bitcoin since 2017, Evariste continued to research the topic. If his first interest was trading, now he is actively trying to understand all the developments focused on cryptocurrencies. As an editor, he strives to consistently deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.