Cryptocurrency Q1 inflows hit record US$4.5b

Business | Reuters 8 Apr 2021

Inflows into cryptocurrency funds and products hit a record US$4.5 billion (HK$35.1 billion) in the first quarter, suggesting increased institutional participation in the once-maligned sector, data from digital currency manager Coinshares showed.

The Q1 inflows represented an 11 percent increase from the last three months of 2020, which hit US$3.9 billion.

Investments into crypto, however, slowed in the first quarter compared with the fourth, where growth was 240 percent. Coinshares said, however, that this was not "indicative of a broader slowing trend, as quarterly growth rates tend to be highly varied."

On Monday, the cryptocurrency sector hit an all-time peak of US$2 trillion in market capitalization. Bitcoin's market cap was more than US$1 trillion, holding that milestone level for one whole week.

"There's so much momentum that's building and people are scrambling to see where the other coins, aside from bitcoin, are going," said Edward Moya, senior market analyst at online FX trading platform Oanda.

Bitcoin had the most inflows in the first quarter with US$3.5 billion, followed by ethereum, which posted US$765 million in investments. The largest cryptocurrency in terms of market cap hit a record high of US$61,781.83 in mid-March, but has since traded in a narrow range as investors consolidated gains.

Crypto assets under management have also surged to a peak of US$59 billion. Last year, assets under management for the sector hit US$37.6 billion.

Grayscale is still the largest digital currency manager, with US$46.1 billion in assets, while CoinShares, the second biggest and the largest European digital asset manager, oversees about US$5.1 billion in assets.

Of the US$59 billion in assets under management, active investment managers represented just 1.5 percent of total assets under management, down from 3.6 percent at the start of the fourth quarter last year.

Total market volumes remained high during the quarter, averaging US$11.6 billion per day, compared with US$3.5 billion in the last three months of 2020.

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