Crypto Asset Flows Bounce Back Grasping $4.5 Billion in Q1 2021

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According to CoinShares Fund Flows Weekly bulletin, Q1 of this year hit a new record with $4.5 billion in inflows compared to $3.9 billion in the final quarter of 2020.

A Promising Future for Crypto Investments

The latest week’s tally record is 11% higher than in the last quarter of 2020. Data from digital currency manager CoinShares showed on Tuesday that the development suggests increased institutional participation in the once- scorned sector.

However, investments into crypto slowed in the first quarter compared with the fourth, where growth was 240%. Coinshares said in the report that this was not demonstrating a broader slowing trend, as quarterly growth rates tend to be highly varied.

For the past week, inflows have been dominated by $83 million in Bitcoin products and $20 million in Ethereum. Volumes for Bitcoin investment products generally comprise a relatively small share of 6.7% of the total trading volume for regulated or ‘trusted’ cryptocurrency exchanges.

Increased Demand

Assets under management for active and passive crypto investment products are at an all-time high of $59 billion. Grayscale is still the most prominent digital currency manager, in this AUM figure with $46.1 billion in assets. CoinShares is the second biggest and the most famous European digital asset manager, with $5 billion in assets under management.

At the beginning of the week, the cryptocurrency sector hit an all-time peak of $2 trillion in market capitalization. Bitcoin’s market cap was over $1 trillion, holding that milestone level for one week.

Edward Moya, the senior market analyst at online FX trading platform OANDA, said that there is a lot of momentum building. People are eager to see where the other coins, apart from bitcoin, will achieve.

Exercising Extreme Caution

Singapore has warned the public several times concerning risks of trading cryptocurrencies like Bitcoin, a market that has surged in significance over the past year while relatively small in the city-state.

In response to a parliamentary question, the chairman of the Monetary Authority of Singapore, Tharman Shanmugaratnam, said that cryptos could be highly volatile since their value is typically not related to any economic fundamentals. He added that they are hence highly risky as investment products and certainly not suitable for retail investors.

Tharman also noted that MAS had issued numerous consumer advisories to warn the public of the risks of trading these products.

MAS has taken steps on three fronts to address the money laundering and terrorism financing risks associated with cryptocurrencies.

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