A representation of bitcoin is seen in an illustration image taken at La Maison du Bitcoin in Paris, France, June 23, 2017. REUTERS / Benoit Tessier / File Photo
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June 7 (Reuters) – As the winter of cryptocurrencies draws to a close in June, the first signs of a thaw are emerging.
Some investors are now betting that bitcoin is bottoming out, judging by the money going to listed cryptocurrency funds, which account for only a fair share of the market but are popular with institutional and retail players.
Overall flows from these funds were positive last month, with an average weekly inflow of $ 66.5 million, an investment compared to a sad April when they saw an average weekly outflow of $ 49.6 million, according to the CryptoCompare data provider.
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“It’s largely institutional and, to some extent, retail investors, recognizing that the pain has already been borne, and we’re closer to the bottom than the top,” said Ben McMillan, director of Arizona-based IDX Digital Assets Investments. .
“If you get into cryptography at these levels, a little short-term volatility could be worth a long-term benefit,” he added. “Many institutional investors are beginning to view cryptography as a source of long-term growth potential.”
It is difficult to know whether the provisional flows will last, however, or whether the nascent trend will replicate throughout the market.
Many people will also think twice before flocking back to the market, having been heavily attacked as cryptography has been hit by concerns about global monetary tightening and rising inflation. Bitcoin has lost about half of its value since the November peak, fell by a third in 2022 and has been languishing at around $ 30,000 for a month.
However, fund data indicates that some investors are returning to cryptocurrency, albeit to the perceived security of IPOs with their promise of greater liquidity and security.
According to Kraken Intelligence, the assets under management of several futures bitcoins ETFs increased last week. The assets of ProShares Bitcoin Strategy ETF have grown by 6%, while those of Global X Blockchain & Bitcoin Strategy ETF (BITS.O) and VanEck Bitcoin Strategy ETF have risen above 3%.
In comparison, the ProShares bitcoin fund saw outflows of more than $ 127 million in April.
The uptrend has extended into June, with global ETP holdings of bitcoins jumping to an all-time high of 205,008 bitcoins in the first two days of the month, found the Norwegian-based cryptographic research firm Arcane Research.
“This is a promising sign for what is to come,” Arcane Vetle analyst Lunde said.
In an indication that investors are being selective and cautious, only bitcoin funds have received inputs while ethereum-focused funds and other cryptocurrencies have still experienced outflows.
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STILL IN RED
But let’s not forget, while the fortunes of some funds may be increasing, most have gotten poor returns this year as the crypto market has sunk.
U.S. digital asset funds have lost 46% on average so far in 2022, with losses of 22% in May, according to Morningstar.
All CryptoCompare-listed digital asset investment products lost money in May, with the worst performance being Grayscale’s Digital Large Cap Fund, down 38.5%.
“Bitcoin has been limited in scope to the broader market activity lately, investors are looking for a fund and don’t know where it is,” said Jack McDonald, CEO of PolySign, which specializes in custody solutions. digital assets for institutional investors.
Shares of Grayscale Bitcoin Trust (GBTC.PK), one of the largest bitcoin funds with more than $ 19 billion in assets, are trading at a 29% discount on the value of net assets, around their highest discount from the beginning and indicating the low demand for the product. .
And despite the rebound in May, many market watchers expect entry into cryptocurrency funds to remain low until macroeconomic and regulatory risks are clearer.
“We’re looking forward to a high-conviction bid to return to the markets,” McMillan added to IDX. “There is still a lot of wood left to cut on the macro front.”
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Report by Medha Singh and Lisa Pauline Mattackal in Bangalore Vidya Ranganathan and Pravin Char Edition
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