Institutional Bitcoin Inflows Surpass $1 Billion in 2023 Amidst Tightening BTC Supply

Bitcoin and altcoins have experienced significant inflows this year, with the issue of a potential Bitcoin supply shortage still under consideration, as the ETF approvals and halving beckons. 

Digital asset investment products witnessed inflows of $293 million last week, marking the seventh consecutive week of positive flows. 

CoinShares’ data reveals that this streak has contributed to year-to-date flows into crypto exchange-traded products reaching $1.14 billion. 

The ongoing institutional interest has propelled the yearly inflows to the third-highest level. Additionally, total assets under management in cryptocurrencies have surged by 9.6% in the past week.

According to the weekly flows report, the total assets under management reached $44.3 billion, showing a 99% increase this year and reaching the highest level since May 2022.

The weekly report can be read here. 

In specific investment products, Bitcoin experienced inflows of $240 million last week, contributing to a year-to-date total of $1.08 billion. The trading volume of Exchange-Traded Products (ETPs) for the flagship cryptocurrency represented nearly 20% of the total volume on reputable exchanges.

James Butterfill, CoinShares’ Head of Research, highlights the rarity of increased ETP volume compared to BTC trading volume, suggesting that ETP investors are more actively participating in the current rally compared to the trends observed in 2020/21.

Noteworthy are the inflows into Ethereum investment products. CoinShares’ weekly report indicates a $49 million influx last week, marking the highest for Ether since August 2022. The sentiment surrounding Ether-based ETPs has notably improved in the past two weeks, coinciding with growing interest in spot Ethereum ETF filings.

Solana, among the standout performers in the cryptocurrency space in recent weeks, observed significant inflows in the past week. Investors allocated $12 million to SOL products during the seven-day period, contributing to its leading position in the segment with $121 million in year-to-date inflows.

This optimistic trend is mirrored in the SOL price, which experienced a sharp decline in November 2022 amid the FTX collapse. Currently trading at $59, Solana has seen a remarkable increase of 170% over the last 30 days and an impressive 315% over the past year.

Moving back to Bitcoin, the revived interest has prompted on-chain analytics company Glassnode to re-evaluate the dynamics of Bitcoin supply. 

As the next block subsidy halving approaches in just five months, the amount of BTC being stored for safekeeping now exceeds the mined quantity by 2.4 times, as highlighted in the latest edition of their weekly newsletter, “The Week On-Chain.”

“The fourth halving event is fast approaching and represents an important fundamental, technical, and philosophical milestone for Bitcoin. For investors, it is also an area of intrigue given the impressive return profile in prior cycles,” it stated.

Among the different accompanying charts, one depicted the storage of BTC by long-term holders (LTHs) — entities holding coins for 155 days or more.

Continuing, Philip Swift, the creator of the statistics platform Look Into Bitcoin, emphasised the growing number of wallet entities, encompassing both large and small holders. 

Describing the phenomenon, he remarked to X subscribers on that day, “This is what adoption looks like.”

Boy, these next 6 months will be crazy.