Institutions Uncertain About Investing in Cryptos: Here’s Why

The latest DAIP (digital asset investment products) weekly insights presented a doubtful trend. Indeed, such a trend will likely attract investor attention. CoinShares’ report discovered that the previous week represented the 3rd successive one of fading inflows into crypto investment products.

James Butterfill of CoinShares commented on the relative $10.3 million low inflows, stating that institutions remained hesitant amidst ongoing market conditions.

DAIP Providers

Meanwhile, CoinShares XBT presented the highest inflows, with its DAIPs investments worth around $16.4 million. Surprisingly, Grayscale had 0 net flow during the week, regardless of its record AUM (assets under management).

21Shares (a renowned BTC ETP provider) dented inflows that other providers contributed. CoinShares found that its outflow stood at $3.6 million. ProShares had its investment products contributing the highest inflow since early 2022, at about $300 million. That’s contrary to its current under management at around $708 million.

Asset Flows

Bitcoin led as the token that accounted for the highest inflows, with investments worth $7.7 million. Bitcoin attracted investments from individuals executing shorts and those that predicted upside tendencies. Meanwhile, the product attracted another $2.1 million over the week.

Germany’s $9.1 million outflows countered Sweden’s inflows contribution worth $16.4 million. Meantime the United States recorded a modest $7.7 million inflows, with its AUM of over $18 million. The DAIPs trading volume over the mentioned week stood at $886 million, representing the lowest figure since October 2020.

Why the Reduced Inflows?

Heightened regulatory scrutiny plus the strengthening USD have contributed to the ugly performance of the products under review. Butterfill stated that the Merge didn’t trigger impressive sentiment as September outflows totaled $65 million.

Amplified regulatory scrutiny plus steady USD were the potential culprits as the PoS migration succeeded. The upcoming November mid-term elections will likely affect regulations and policies surrounding the cryptocurrency market.

As crypto entities work in all ways to satisfy pro-cryptocurrency policies and ensure crypto-friendly products, investors can expect more bullish trends towards the year-end. Reduced crackdown and regulatory clarity on the overall cryptocurrency space will bring that investors need to start investing in DAIPs again.