Institutional investors are showing increased confidence in the crypto market, with the largest allocation of capital into digital assets markets in over a year. According to a report by digital assets manager CoinShares, institutions invested $326 million into crypto investment products last week, marking the highest weekly inflow since July 2022.
This surge in investment coincides with growing optimism among investors that the US Securities and Exchange Commission (SEC) is nearing approval of a spot-based Bitcoin (BTC) exchange-traded fund (ETF) in the US. CoinShares reports that 90% of the inflows from institutions were directed towards BTC, indicating the perceived likelihood of a Bitcoin ETF.
However, CoinShares notes that the inflows were not historically significant for Bitcoin, suggesting some hesitancy among investors. Despite this, the firm believes that a spot-based ETF is highly likely to be approved in the coming months, which would represent a significant regulatory milestone for the industry.
CoinShares data reveals that Solana (SOL), a rival of Ethereum (ETH), received the highest amount of capital flows, making it a favored choice among institutional investors in 2023.
The majority of the capital flows came from countries other than the US, with Canada, Germany, and Switzerland leading the way with inflows of $134 million, $82 million, and $50 million respectively. Additionally, Asia saw a record-breaking weekly flow of $28 million, indicating growing interest in the region.
In conclusion, rising optimism in the crypto market has led institutional investors to increase their capital allocation. The potential approval of a Bitcoin ETF by the SEC has fueled this optimism, with BTC receiving the majority of the inflows. While the inflows are not historically significant for Bitcoin, they indicate a positive trend. Solana has emerged as a favored choice among institutional investors, and capital flows from countries outside the US are significant. This data suggests that the crypto market continues to gain traction and attract institutional interest.
