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Institutions opt for investment strategies based on diversification

Photo of: Joseph Stone
by Joseph Stone

Institutional investors continue to diversify their portfolios, thus opting for multiple cryptos rather than Bitcoin or Ether.

The weeks have been going by… and looking the same since the cryptocurrency price crash in May. While Bitcoin has undoubtedly hit its lowest level, confidence is slow to fully recover among investors.

In this context, the latter favor investment strategies based on diversification rather than focusing on one or two major crypto-assets. This explains the outflow of capital from Bitcoin and Ether investment products in recent weeks.

According to CoinShares’ latest report, Digital Asset Fund Flows Weekly, $1.58 billion of digital asset products were changing hands between July 5 and July 9. And the picture is once again unfavorable for BTC.

Overall, net flows are negative with $4 million less in crypto products, including $7 million in Bitcoin products alone. This is the global trend. European investors seem slightly more optimistic.

According to the report, the flow is instead positive for European Bitcoin products. Could investors in the region be more confident about the future prospects of the leading cryptocurrency? It’s a possibility, even if caution prevails.

Indeed, this caution is expressed by the diversification of crypto investments, especially among institutional investors. Over the past 9 weeks, BTC products for these investors were recording outflows eight times.

The trend is no different for Ether with outflows reaching $64.3 million since the week ending June 6. On the other hand, multi-asset products show a positive balance week after week.

362 million for multi-asset products; This was once again the case in the last week with inflows of $1.2 million, CoinShares measures. Thus, since the beginning of 2021, multi-asset products have grown by $362 million.

These investment products now weigh in at 16.5% of multi-asset fund assets under management. It’s a far cry from Bitcoin’s billions of dollars and Ether’s 900+ million, nevertheless, the trend is definitely there.

“While inflows remain relatively small compared to Bitcoin and Ethereum, the data implies that investors are increasingly looking to diversify their holdings into digital assets,” the report notes.

Investors are also turning to Cardano, which is flowing positively at $600,000. In contrast, Binance’s token, Binance Coin, is in the red by $400,000. The exchange’s run-ins with regulators are not helping investments.