Daily Management Review

Investment In Cryptocurrency Touches All-Time High Of $4.5B In Q1


Investment In Cryptocurrency Touches All-Time High Of $4.5B In Q1
Available data from digital currency manager Coinshares showed this week that during the first quarter of the current year, there was a record inflow of money into funds dealing in crypto currencies and other related products at $4.5 billion.
According to analysts, this is clear indication of the growing interest of institutional participation in this once-maligned asset sector.
In the fourth quarter of 2020, the inflows into this sector were at $3.9 billion and hence the first quarter inflows eclipsed that number by 11 per cent.
The data however also showed that there was a slowdown in the growth in investment in crypto currencies in the first quarter of the current year compared to the fourth quarter of the last year when the growth in inflow was an astounding 204 per cent quarter on quarter.
This however was not "indicative of a broader slowing trend, as quarterly growth rates tend to be highly varied", Coinshares said in the report.
The total global market capitalization for all crypto currencies reached an all time high of more than $2 trillion on Monday. The market cap for bitcoin alone was at more than $1 trillion on Monday and the digital currency had been holding that milestone level for one whole week.
"There's so much momentum that's building and people are scrambling to see where the other coins, aside from bitcoin, are going," said Edward Moya, senior market analyst at online FX trading platform OANDA.
According to the Coinshares data, with investments of $3.5 billion, the most inflows in the first quarter went to bitcoin which was followed by investment in ethereum which recorded a total investment of $765 million in the same period.
Bitcoin, the largest crypto currency of the world in terms of market cap, touched a record high value of $61,781.83 in the middle of March. However since then it has continued ot trade in a narrow gap as investors were focused on consolidated gains.
CoinShares data showed that during the quarter, the value of the crypto assets under management also surged and reached an all time high of $59 billion. The total value of the assets under management for the sector was at $37.6 billion last year.
With a total of $46.1 billion in assets, the largest digital currency manager of the world was Grayscale while the second biggest and the largest European digital asset manager was CoinShares which manages a total of about $5.1 billion in crypto assets.
Just 1.5 per cent of the total assets under management was represented by the total crypto assets under the management of active investment managers out of the $59 billion in assets under management. That share at the beginning active investment managers was at 3.6 per cent.
Total market volumes remained high during the quarter, averaging $11.6 billion per day, compared with $3.5 billion in the last three months of 2020.