Crypto funds raise $1 billion after weeks of outflows: Investors see buying opportunities

In recent weeks, investors withdrew billions of dollars from crypto funds. However, sentiment now seems to be turning cautiously. After a period of strong outflows, crypto investment funds are attracting new capital again. According to asset manager CoinShares, a total of $1 billion flowed into these digital investment products last week.

Bitcoin price attracts most of the inflow

In a recent blog, James Butterfill, head of research at CoinShares, writes that Bitcoin (BTC) in particular benefited from the turnaround. Funds focusing on the largest cryptocurrency raised $881 million. Bitcoin thus accounted for most of the recovery.

Ethereum (ETH) followed with $117 million in inflows. That is the strongest week for the digital currency since mid-January. Yet, on balance, both BTC and ETH funds are still in negative territory this year. The recent inflows have therefore not yet fully offset the previous outflows.

The United States accounted for the largest share of inflows, with $957 million. New capital also flowed into Canada, Germany and Switzerland, albeit in smaller amounts.

Major investors see buying opportunities again

According to Butterfill, there is no clear macroeconomic reason for the sudden turnaround. He writes: “Based on what we’re hearing, recent conversations with clients have been almost entirely about finding entry points, and much less about deleveraging their position in this asset class.”

Large investors are therefore less concerned with selling and instead focus on buying opportunities. Throughout February, the Bitcoin price largely moved within the same trading range of $60,000 to $70,000. After weeks of sideways movement, investors seem convinced that this is an attractive entry point.

Bitcoin vulnerable due to rising oil prices?

In the meantime, a lot is happening geopolitically. The war in the Middle East has virtually closed the Strait of Hormuz. This is an important passage for oil tankers, through which about a fifth of the world’s oil passes.

This disruption causes oil prices to rise rapidly. And a higher oil price causes higher inflation, because fuel and transport become more expensive.

Analyst Wolf of All Streets warns on X that a sharp increase in the price of oil could be bad for Bitcoin. It could cause higher inflation and therefore less room for interest rate cuts by central banks. If interest rates remain high, investors often exit risky investments such as crypto.