Key points to remember:
- Institutional investments fell 95% against their ATH in 2021, according to latest CoinShares report
- Investors have pulled money from Ethereum products due to concerns about the network’s transition to proof-of-stake
- CoinShares concluded that despite the decline, it is encouraging that investors are still choosing to invest in crypto, despite the hawkish FED and broader economic issues.
Institutional crypto flows in 2022 fell to lowest levels since 2018
The price of Bitcoin and virtually all digital assets plunged in double digits last year, causing the total crypto market cap to drop to $800 billion from $3 trillion in 2021.
The latest report from CoinShares, Europe’s largest digital asset trading and investment group, showed that falling market prices were also reflected in investor sentiment. While institutional crypto inflows reached their all-time high of over $9.1 billion in 2021, investments dried up in 2022, falling to just $433 million. That’s a massive 95% drop in a single year.
The $433 million figure is the lowest amount investors have spent on crypto projects since 2018, when there was just $233 million invested during the year.
ProShares, the company behind the Bitcoin Strategy ETF (BITO), accounted for the largest share of total inflows in 2022, with $320 million. On the other side of the spectrum, investors withdrew $529 million from 3iQ’s crypto investment products, which include Bitcoin and Ethereum offerings.
While Bitcoin’s net investments were $288 million, Ethereum’s investments saw net outflows of $402 million. According to CoinShares, the main reason for the ETH outflows was investor concerns over the transition from the Proof-of-Work (PoW) consensus algorithm to Proof-of-Stake (PoS).
Despite the sharp decline in investment year over year, CoinShares noted that it is “encouraging” to see investors choosing to invest, “In a year where bitcoin prices fell 63%, a clear bear market precipitated by irrational exuberance and a hawkish FED.
David is a crypto enthusiast and personal finance expert. He has created numerous publications for different platforms. He loves exploring new things, and that’s how he discovered blockchain in the first place.
