Cryptocurrency investment fund cash flow hit multiple new records in October

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Cryptocurrency investment funds have seen a significant increase in trading volume and are active again. At the same time, a new record was set.

Not only are many retail investors excited about Bitcoin’s (BTC) upward momentum, fund managers are also optimistic about the near-term future of Bitcoin and the market as a whole. The evidence is that a lot of data from investment funds shows breakout signals.

Specifically, according to Report Asset management platform CoinShares On October 30, cryptocurrency exchange-traded products (ETPs) saw their largest weekly inflows in more than a year since July 2022, with 3$26 million.

Among them, funds flowing into Bitcoin accounted for 90%, amounting to US$296 million. Coinshare believes that the reason may be the positive sentiment among investors in anticipation of the approval of the Bitcoin ETF spot. Solana (SOL) also has big expectations, with cash flow of +$24 million.

However, this positive sentiment does not seem to be suitable for ETH. This altcoin achieved negative cash flow (-$6 million) compared to BTC and SOL, reflecting a lack of expectations for ETH’s future price.

However, capital inflow data still showed confidence in the short term.

Capital flows into cryptocurrency investment products hit a 15-month high. Source: Coinshare.

As we all know, ETPs are investment funds with 10-year bonds and stocks that track the price of specific assets. In the case of cryptocurrency ETPs, they typically track the price of cryptocurrencies with large market caps, such as Bitcoin or Ethereum.

Some investors prefer to access cryptocurrency prices through funds rather than holding these assets, since fund shares can be held in traditional brokerage accounts.

“Cash inflow” An ETP occurs when a fund’s price rises faster than the underlying asset, causing the fund to purchase the asset. This is generally considered bullish for the underlying asset.
“cash outflow” This occurs when a fund has to sell assets because the price of a bond or stock falls relative to its target price, which is generally considered bearish.

In addition to the continuous flow of funds into the cryptocurrency market, the trading volume of funds has also broken through and begun to become active again. Average trading volume last week exceeded $170 million, the highest level since the beginning of the year.

Fluctuations in capital trading volume. Source: CryptoQuant

It is worth noting that since this year, the fund size has suddenly increased three times:

The first time was in March,
The second time was in July,
The third time is October.

All three times, BTC price created new higher peaks and new support gradually increased. Therefore, the third investment volume is the largest. This shows that the fund has a high degree of confidence in Bitcoin’s recent upward trend, far exceeding the previous two times.

Many fund managers have also become more optimistic about their stocks than before. Finder’s latest survey of industry experts shows that BTC prices could rise to $87,000 by 2025 and $220,000 by 2030.

A broader look at the last two years of data shows that the quiet period for fund trading is over.

Fluctuations in fund trading volume in the past two years. Source: CryptoQuant.

The fund’s trading lull is when Bitcoin prices fluctuate below $25,000, lasting from the fourth quarter of 2022 to the end of the second quarter of 2023. In the third quarter that just passed and throughout October, fund trading volume returned to a rhythm. Since August 2022, trading volume in October has reached an extremely high level.

But compared to the uptrend period in 2021, when BTC was also around $34,000, the current trading volume is negligible. The same price range, but the trading volume in 2021 is 10 times higher, proving that the liquidity of funds is not high.

Regardless, this new record also suggests that the recession is over and cryptocurrency investment fund managers are paying more attention to the market.

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