Not only are many retail investors excited about the recent rise in Bitcoin (BTC), but fund managers are also showing optimism about the future of Bitcoin and the overall market. Evidence of this can be seen in data from various investment funds.
Specifically, according to a report on October 30 by the asset management platform CoinShares, cryptocurrency exchange-traded products (ETPs) have witnessed the largest weekly inflow of funds in over a year since July 2022, totaling $326 million.
Among these inflows, Bitcoin accounts for 90%, with $296 million flowing into it. CoinShares suggests that this may be due to investors’ positive sentiment, driven by expectations of the approval of a Bitcoin ETF Spot. Solana (SOL) has also gained significant interest with a positive inflow of $24 million.
However, this positive sentiment does not seem to extend to ETH. In contrast to BTC and SOL, Ethereum has experienced negative outflows (-$6 million), indicating a lack of confidence in Ethereum’s future price.
Despite this, the data on fund flows still reflects short-term confidence among funds.
It’s worth noting that ETPs are investment funds with 10-year bond futures and stocks, tracking the price of a specific asset. In the case of cryptocurrency ETPs, they typically track the prices of major cryptocurrencies like Bitcoin or Ethereum.
Some investors prefer to access cryptocurrency prices through these funds rather than holding the assets themselves because fund shares can be held in traditional brokerage accounts.
“Inflows” to ETPs occur when the fund’s price rises faster than the underlying asset, causing the fund to buy more of that asset. This is often seen as a bullish signal for the underlying asset.
“Outflows” occur when the fund has to sell the asset because its share price or stock is declining relative to its target. This is typically seen as a bearish signal.
In addition to the continuous influx of funds into the cryptocurrency market, the trading volume of these funds has also seen a breakthrough and is becoming more active. The average weekly trading volume over the past week exceeded $170 million, marking the highest level since the beginning of the year.
Furthermore, it’s important to note that in 2023, there have been three instances of a significant increase in fund volume:
1. In March
2. In July
3. In October
During all three of these instances, Bitcoin reached new all-time highs, with higher support levels each time. Therefore, the volume from funds in this third instance is the largest, indicating a high level of confidence in Bitcoin’s recent uptrend, more so than in the two previous instances.
Many fund managers are now more optimistic than before. According to the latest survey by Finder, industry experts believe that the price of BTC could reach $87,000 in 2025 and $220,000 in 2030.
Looking at the broader picture over the past two years, it can be observed that the quiet trading period of the funds has passed. This period of subdued trading occurred when the price of Bitcoin was below $25,000, lasting from Q4 2022 to the end of Q2 2023. In Q3 and October, the trading volume from the funds has rebounded. October’s volume has set a new record high since August 2022.
However, compared to the 2021 uptrend period when BTC was also around $34,000, the current volume is relatively low. At the same price range, the 2021 volume was ten times higher, indicating that liquidity from the funds is still not very high.
In any case, this new record is a sign that the previous pessimism has passed, and cryptocurrency fund managers are paying more attention to the market.