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  • Institutional demand for crypto-related investment products dropped by 59% in the past week as Bitcoin trades sideways.
  • Assets under management for top institutional investment products have reached a record high at $57 billion.
  • Investors are looking to diversify as the appetite for Ethereum has increased in early February.

Institutional demand for cryptocurrency-related products has significantly declined in the United States for the week ending March 20. Despite the drop of inflows in the US, European and Canadian institutions have sustained their appetite.  

Bitcoin-related products see a 35% decline

Digital asset investment manager CoinShares witnessed a decline of around 35% in Bitcoin-related product trading volumes last week of $713 million per day, compared to $1.1 billion per day for 2021. However, the cryptocurrency itself continued to trade at a volume of $11.8 billion per day in the US.

According to CoinShares, combined inflows into institutional products have totaled $99 million for the week that ended on March 20. Institutional demand dropped by 59% compared to the previous week, which registered $242 million.  

There seems to be a regional divide, with the US seeing a decrease in demand, while European and Canadian institutions have continued buying. The reduced appetite for digital asset funds could mirror the Bitcoin price uncertainty, as the cryptocurrency has continued to trade  sideways  in the range between $54,000 to $61,000 in the past week. The firm noted:

Since the February price highs and heightened volatility, we have seen a steady decline in appetite amongst investors.

Despite the decline in demand, assets under management for top institutional investment products have reached a new high at $57 billion.  

Investors have set their sights on Bitcoin, as the leading currency’s products have taken most inflows, while Ethereum and Polkadot-related products have lagged. Other altcoin-related investment products, including Binance, Ripple, and Bitcoin Cash, have seen very little activity, according to CoinShares.  

As of March 22, Grayscale continues to be the industry leader for institutional crypto investment, with a total of $44.2 billion in assets under management.  

Institutions continue to focus on BTC

Mathew McDermott, the head of digital assets for Goldman Sachs, conducted a cryptocurrency survey revealing that all of its “institutional client discussion is really focused around Bitcoin.”  

40% of the clients already have exposure to cryptocurrencies, either in physical form through derivatives, securities products, or other offerings. McDermott further sighted that the key drivers to invest in Bitcoin are the negative rates and general fears associated with  asset devaluation.  

The Goldman Sachs executive further pointed out that 41% of the clients who already have exposure to crypto own physical or spot digital assets. Additionally, 61% of these institutional clients expect their cryptocurrency holdings to climb over the next year.  

Major US bank Morgan Stanley has also recently  offered  its clients access to three funds enabling Bitcoin exposure, citing an influx of requests from clients.  

Ethereum-based investment products grow in popularity

Ahead of Ether futures’ launch on the Chicago Mercantile Exchange, institutional investors have been heavily accumulating ETH products, which accounted for 80% of inflows in the week ended February 8.

CoinShares suggested that investors have been looking to diversify and are getting more comfortable with Ethereum fundamentals. During the same week, Bitcoin had its lowest inflows since all-time highs recorded in early January.