Crypto Inflows Review: Cryptocurrency inflows hit all time high in the first quarter.
It’s already a quarter past the New Year, and the volatility of cryptocurrencies hasn’t failed to surprise the world. CoinShare reported many peaks and troughs in the price of Bitcoin since the start of the year. Many attributed it to the decline in the inflow of cryptocurrency funds and products. To make things simpler, crypto inflow can be defined as the amount of coin deposited into the wallets and crypto outflow, being the opposite of inflow, is defined as the amount of coin withdrawal from the wallets. Bitcoin started the year 2021 pretty decently until the news about Tesla’s investment sent its price to the moon. From that day onwards, Bitcoin kept on fluctuating until March when it experienced its first biggest drop of the year.
BITCOIN FIRST CRASH OF THE YEAR
According to the reports issued by CoinShare, a digital asset investment firm, Bitcoin’s fund inflow declined alongside its price in Late March 2021. Fund flows into digital coin investment products decreased by 58% to $99 million during a week before March 23rd, the lowest recorded since October 2020. This was closely followed by a drop in the price of Bitcoin to below $55,000. Bitcoin fell by 5.8% over 24-hours and accounted for its largest daily decline since February 23rd. This can be attributed to high volatility and to prices that traded sideways. Consequently, this led to the low interest of investors for cryptocurrency funds. CoinShare further reported significantly low inflows, along with outflows (in some cases), in larger and longer pre-2016 established investment products. One reason for it, being investors taking profits from multi-year gains. This trend of reduced fund inflows is also regional, with the U.S. showing reduced investment flows as compared to Europe and Canada which continue to move forward. Another setback follows when trading volume in digital asset investment products falls to $788 million per day in March contrary to $900 million per day at the beginning of 2021. Later in the week, this low bumpy ride came to a halt when Bitcoin stabilized at $54,000 after a nasty fall to $53,715. This was recorded as the lowest price since March 16th 2021.
CRYPTO FUNDS INFLOW GAINED MOMENTUM
After its fall to the lowest value of the year, Bitcoin is finally gaining momentum. CoinShare reported an increase in the inflow of cryptocurrency funds and products in the first quarter of 2021. This reflects that the institutional investors are again looking forward to investing in cryptocurrency. Interestingly this assumption was proved right when Bitcoin reached $58,000 as of April 7th, 2021. Previously the highest cryptocurrency funds inflow was recorded at $3.9 billion in the fourth quarter of 2020. This made the total 2020 funds inflow reach $6.7 billion, says CoinShare. Investment inflow into cryptocurrency funds took a five-fold leap reaching $106 million this year. This was higher than the previous five months record. Last week the fund’s flow was limited to $21 million, the lowest since October. CoinShare reports that the latest week’s numbers indicate a record quarter for cryptocurrency fund flow, soaring to $4.5 billion, 11% more than that in the last quarter of 2020. Bitcoin still stands as the biggest digital currency and has the most inflows with $3.5 billion. Ethereum followed Bitcoin with $756 million inflows. Bitcoin, the largest cryptocurrency in terms of market cap, soared to $61,781.83 in mid-March. Surprisingly this pace is still slower than that of the last quarter of 2020 which was recorded at 240%. This might indicate a difference in the interest of investors between the two years. Last year amid the pandemic, investors were more concerned about securing the value of their assets and seeking protection against inflation. Hence they turned towards this asset which showed relative stability as compared to other drastically falling asset classes. Since the economy is stabilizing, investor’s interest might shift away from Crypto owing to its volatile nature. Contrary to that, CoinShare warned not to jump to conclusions based on these results. It says that this difference is not an indication of a slow trend since quarterly growth rates are highly variable. It also added that Assets Under Management (AUM) for both active and passive asset investment products are recorded to be the highest at $59 billion.
HIVE BLOCKCHAIN TECHNOLOGIES
.Hive Blockchain Technologies, a crypto mining firm, in a news release on April 7th 2021 declared that its coin directory value of Bitcoin and Ethereum increased by 300% in just three months. Hive stock investors noticed that the company’s crypto profile value was only at $15 million as of December 2020. Now it stands at $60 million as of March 2021. Many will be amazed as to how on Earth that happened in almost, a blink of an eye! The increase in the dollar value of Hive’s coin portfolio is astonishing. This is partly due to new mining production accompanied by rising prices of cryptocurrencies, but largely due to the holding of the coins. Since the start of 2021, Hive Blockchain Technologies has been holding its newly mined Bitcoins and Ethereum and stacking them up in the cold wallets. By the end of the first quarter of the year, Hive had 320 Bitcoins and over 20,030 Ethereum coins on their portfolio. Since the prices of both the virtual coins increased by 200% during the first three months, Hive’s coin inventory value rose likewise. The company aims at holding the coins for the benefit of its shareholders. Currently, the value of their crypto assets is $60 million and cash of around $36 million as per the Management of Hive. People investing in crypto mining stock would be happy to see such an increase in the value of the portfolio.
The largest cryptocurrency has doubled since the start of 2021 owing to investments from institutional investors increasing crypto inflow. Bigger investments into Bitcoin will push its price higher since more inflows will indicate more trust in the cryptocurrency.
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