Bitcoin Funds Rake In New Money as Altcoin Funds Suffer

Funds that manage BTC pulled in some $126 million last week, more than all other digital-asset funds combined, a CoinShares report shows.

AccessTimeIconJun 6, 2022 at 7:52 p.m. UTC
Updated May 11, 2023 at 3:44 p.m. UTC

Bitcoin (BTC) funds saw their second consecutive week of inflows and outraised other digital-asset funds as investors grapple with an uncertain outlook on crypto markets.

The latest report from digital-asset fund provider CoinShares shows that bitcoin-focused investment funds netted $125.9 million in inflows in the week through June 3, bringing the total since the start of the year to $506 million in net inflows. Overall, crypto funds netted some $100 million in inflows, meaning that new money allocated to bitcoin funds compensated for the losses of non-bitcoin funds, or alternative cryptos (altcoins).

The outperformance is a sign that "investors are flocking to the relative safety of bitcoin," according to James Butterfill, head of research at CoinShares.

Some investors have reduced their exposure to risky assets, including cryptocurrencies, as financial markets adjust to persistently high inflation, interest-rate hikes by central banks around the globe and growing recession fears. Digital-asset investors see bitcoin, as the cryptocurrency with the longest history and largest market capitalization, as less risky than most other tokens. Bitcoin's "dominance" – its share of the overall industry market capitalization of – has climbed higher this year.

BTC traded range-bound between $29,000 and $32,000 last week and was changing hands at $31,259 at press time.

Ethereum funds continued their negative streak, marking nine consecutive weeks of outflows. Investors pulled out $32 million from funds that manage the second-largest cryptocurrency, ether (ETH), adding up to $357 million in outflows year to date. The outflows picked up in December 2021, and they represent a relatively small share (7%) of the total value of assets under management, the report added.

Short-bitcoin funds, which intend to profit from bitcoin's price going lower, saw $1.3 million in inflows.

Multiasset funds, which manage more than one cryptocurrency, netted $4.3 million in inflows, bringing total inflows up to $201 million since the start of the year, underlining investor demand for diversification.

Funds that manage cryptocurrencies other than bitcoin or ether didn't move significantly. Funds that manage solana (SOL) and XRP saw minimal inflows ($0.2 million and $0.1 million, respectively).

The regional breakdown shows that last week's flows predominantly came from the Americas with $88 million last week. In comparison, funds listed in Europe saw just $11 million in inflows last week, continuing a trend where "European investors have been much more bearish this year so far," the report added.

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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.