From February 3 to 9, inflows into cryptocurrency investment products totaled $1.1 bln. Year-to-date, inflows stand at $2.7 bln. How effective is the process and what is holding it back?
Inflows into crypto investment products arise in a variety of ways, but as events unfold, there are signs of stabilization and improvement. In February, financial flows normalized because earlier in January, the focus was on outflows from spot Bitcoin ETFs and products that were available on the market before that time.
The market needed time to digest. After the SEC agreed to license spot bitcoin ETFs, the traditional stock market strategy ‘sell the fact’ took hold. And while the hype has faded, market participants are now in the process of building new logical connections.
The cryptocurrency market tends to overreact. This leads to sudden shifts in sentiment – a risk that needs to be factored into market strategies. On the other hand, cryptocurrency investors also tend to ‘buy the dip’. This is their strong point.