CoinShares released a market sentiment report on Monday showing that crypto investment funds saw an inflow of funds worth $76 million during the previous week. As per the report, this is the fourth consecutive week of such inflows, with year-to-date inflows that now stand at $230 million. This signals that investors are now feeling more optimistic about the crypto market and are putting more capital into crypto funds than in the past, the report said.

According to CoinShares, the capital is flowing into cryptocurrency funds such as Grayscale, 3iQ, and 21 Shares - investment products accessible to institutional and accredited investors.

The report indicates that since the beginning of this year, the market sentiment has improved, with total investment assets under management (AuM) have surged 39% year-to-date and now standing at $30.3 billion, the highest since mid-August 2022. Regionally, such inflows have been contributed by institutional investors from the US, Canada, and Germany, who pumped in funds worth $38 million, $25 million, and $24 million, respectively.

As per the report, investors are mostly targeting to invest in Bitcoin. The flagship cryptocurrency has continued to remain the key investor focus, with inflows totaling $69 million, which represents 90% of the total flows for the week, CoinShares stated in its document.

Head of Research at CoinShares, James Butterfill, commented on the report and identified the weakening dollar and attempts by the US Federal Reserve to soften its monetary policy stance as the key factors triggering the improving market mood.

Late last month, the Federal Reserve raised interest rates by only 25 percentage points at its first meeting of the year. The hike was its eighth straight interest rate rise since it started a program of tightening borrowing costs in the previous year as part of efforts to bring down inflation.

It is the smallest rate hike since last March, when the Fed started raising rates by 75 basis points and did the same in June, July, and September. In December, the central bank hiked rates by 50 basis points.

The improved market sentiment has been reflected in the significant uptick in Bitcoin’s price since the beginning of 2023.

However, the crypto market could experience further pullbacks in case the Fed decides to tighten its monetary policy. Investors are awaiting to hear the latest commentary from Federal Reserve Chairman Jerome Powell today.

Bitcoin price action

Bitcoin is currently trading its price at $22,924.60, down 0.17% in the last 24 hours, with a trading volume of $24,392,806,949, according to Coinmarketcap.

So far this year, the crypto has moved beyond the $21,000 mark several times, acquiring almost 40% since the beginning of the year amid the anticipated softening of the US Federal Reserve’s interest rate hikes.

Although Bitcoin is down over 60% from its all-time high record of the $69,000 mark, reached in November 2021, the coin has provided some impressive optimism. The rising adoption rates, which continue to grow, seem to influence its positive price movements. 

Nicholas Otieno

CBW - External Analyst

KENYA