BlackRock Bitcoin ETF Prospects Boost Institutional Investor Sentiment

A bearish streak of outflows from crypto investment products has been largely staunched in light of BlackRock’s Bitcoin ETF bid. Yet, investors still pulled $5.1 million from digital asset funds last week, according to a report from CoinShares.

The continued outflows among exchange-traded products, mutual funds, and over-the-counter (OTC) trusts tracked by CoinShares represent the ninth week in a row that investors, globally, have sought shelter from digital asset exposure.

However, $5.1 million is magnitudes less than $88 million pulled from funds by investors the week before, when the crypto market was roiled by high-profile SEC lawsuits against Coinbase and Binance that labeled a slew of altcoins securities. In total, investors have yanked $423 million from funds over the past nine weeks.

CoinShares attributed the comparative trickle of outflows to BlackRock’s Bitcoin exchange-traded product (ETP) gambit. On Friday, when the Wall Street titan moved, there were $5 million in inflows, CoinShares Head of Research James Butterfill told Decrypt.

“The end of the week saw minor inflows following the news that one of the world’s largest asset managers has applied for Bitcoin ETP in the U.S., although these inflows were not enough to offset outflows seen earlier in the week.” he wrote in a report.

Over 85% of weekly inflows came via Grayscale, the fund manager that controls the Grayscale Bitcoin Trust (GBTC). For years, the company has sought to convert its multi-billion dollar, flagship fund into a coveted spot Bitcoin ETF. On Friday, shares of GBTC closed up nearly 13% at $15.12 per share.

Altcoins & America

Last week’s outflows were concentrated mostly among products tracking the price of Ethereum, which saw $5 million out the door. But the selling across digital asset funds was partially offset by investors buying the dip on altcoins, such as XRP ($1.1 million), Cardano ($0.6 million), and Polygon ($0.2 million).

Over the past month, XRP has gained 4.7%, rising around two cents, as Ripple, which created the token, continues to tread water in its court battle with the SEC. XRP spiked as documents—which shed light on a former SEC director’s now-infamous speech—were made public last week, but it didn’t last.

Cardano and Polygon were ensnared in SEC lawsuits, not as defendants, but rather as alleged examples of securities trading on Binance and Coinbase. The tokens, which other firms have moved to modify the listing of, have fallen around 17% and 31% over the past month, respectively.

While the digital assets industry has faced regulatory pressure over the past several weeks, hawkish statements from the Federal Reserve signaling more rate hikes may be to come haven’t made investors any less cautious, Butterfill noted in a separate report.

But, despite the headwinds, U.S. investors accounted for $3.7 million worth of fund deposits last week and were followed by Germany’s $2.7 million worth of inflows.

Investors in Sweden and Switzerland pulled $3.3 million and $5.8 million from digital asset funds, respectively. And Butterfill notes, that despite a burgeoning regulatory climate for crypto in Hong Kong, the region has not yet seen significant inflows this year.