Cryptocurrency markets appear calm heading into the weekend after a volatile week that tested how institutional investors new to cryptocurrency trading would react to the mammoth swings that are old hat to more seasoned cryptocurrency investors.
The sell-off in bitcoin and ether began earlier this week and wiped out $367 billion in value, just as markets in Japan were plunging. But it turns out that these novice cryptocurrency traders were ready to buy the dip.
Spot ether tradable mutual funds collectively saw net inflows of approximately $120 million this week, with most traders buying on Monday and Tuesday, when the world’s second-largest cryptocurrency fell 42% from its March price high of over $4,000.
Although net flows for the spot bitcoin ETFs has been negative since Monday, data from cryptocurrency analyst CoinGlass shows that demand began to accelerate again midweek, with the spot capital bundle adding more than $245 million on Wednesday and Thursday.
Bitcoin and Ether, 1 month
Hundreds of millions of dollars began flowing into spot bitcoin ETFs on the same day Morgan Stanley gave the go-ahead for its 15,000 financial advisers to begin referring clients with a net worth of $1.5 million to the funds issued by BlackRock and Loyalty.
The bank, which is one of the world’s bigger wealth management firms, is the first of the big players on Wall Street to take that step. Until this point, wealth management firms only facilitated trades if clients specifically requested exposure to these new spot crypto funds.
Morgan Stanley’s $1.5 trillion in assets under managementthe bank disclosed in a May 13 filing that it held about $270 million in spot bitcoin ETFs. The next filing deadline on Wednesday will provide the latest reading on how much exposure banks and hedge funds now have to these spot crypto products.
The expectation is that other desks and asset managers, which have been on the sidelines performing internal due diligence on spot crypto ETFs, may feel the pressure to soon follow Morgan Stanley’s lead.
Spot ether ETFs, which launched less than three weeks ago, saw relatively mild flows compared to the outpouring of bitcoin spot ETFs in January. Bitcoin funds collectively hold $54.30 billion in assets under management, compared to $7.25 billion in spot ether funds.
Continuing US stocks
The cryptocurrency market traded flat with US stocks for most of the week.
The market cap of all chips has gained hundreds of billions of dollars since Monday and is now over $2.1 trillion.
Bitcoin hit an intraday high of nearly $63,000 on Friday, and ether was trading above $2,700 earlier.
More than $100 million in short bets on bitcoin liquidated over the past 24 hours, helping support bitcoin’s gains.
Although bitcoin and ether are significantly higher from Monday’s intraday lows, both assets are still down over the past seven days, with ether on pace for its worst week in nearly two years.
It’s a similar story with some of the crypto-aligned stocks. Coinbase, MicroStrategy and bitcoin miner Riot Platforms Shares posted a third straight weekly loss.
Cryptocurrency price movements this week revealed how much digital assets continue to track US stocks and how they tend to respond to the same macro triggers.
Earlier this week, easing yen carry trade contributed to the turmoil that roiled global markets, and then on Thursday new jobless claims data came in lower than expected, helping ease recession fears. The S&P 500 posted its best day in nearly two years on Thursday, and the cryptocurrency market was buzzing again.
It also helps that the regulatory winds seem to be shifting.
However, another US judge has sided with the crypto industry in a legal battle against the US Securities and Exchange Commission.
U.S. District Judge Analisa Torres ordered Ripple to pay $125 million in civil penalties, which was significantly less than the $2 billion the SEC was seeking. Ripple’s XRP token surged 22% Thursday on the news.
