The cryptocurrency market witnessed a notable drop in prices over the past week following the collapse of the FTX exchange. The broader cryptocurrency market capitalization is still below $900 billion, and most coins are yet to recover their losses.
However, it now appears as if the low prices have attracted institutional investors. A recent report by CoinShares said that institutional investors were buying the recent price decline.
Institutions are buying the crypto dip
According to CoinShares, digital asset investment products recorded the highest inflows in 14 weeks, totaling $42 million. The inflows commenced later during the week when the FTX and Alameda implosion happened, followed by extreme price volatility.
One of the coins that recorded a massive decline after the collapse of FTX was Bitcoin. The coin reported inflows of $19 million during the week, the largest inflows recorded since early August 2022. On the other hand, short Bitcoin inflows also saw inflows of $12.6 million.
Blockchain equities reported the largest weekly outflow since May 2022. These outflows totaled $32 million, showing that conservative investors that invested in these products withdrew their funds from the platform.
The behavior of investors during the week of the FTX collapse showed that investors were taking advantage of the price dip to secure more low-price assets. Moreover, investors also started differentiating between trusted third parties and the trustless system.
Inflows into crypto products were recorded across multiple countries. These inflows were seen in Brazil, Canada, and the US. In Canada, inflows were worth $4.3 million, in Brazil $8 million, and the US had $29 million in inflows. On the other hand, Switzerland reported a different trend, with outflows totaling $4.6 million. Nevertheless, Switzerland remains the only country with the largest inflows year-to-date.
On the other hand, Ethereum reported minor inflows of $2.5 million. Multi-assets also reported the largest inflows since June 2022, totaling $8.4 million. This showed that investors viewed the token as a safe haven that could protect their investment from a further downtrend in the short term.
Despite the increasing inflows, cryptocurrency prices are yet to recover fully. Bitcoin is still at the $16k level, while Ether is struggling to hold $1,200. The market cap remains below $900 billion. Nevertheless, volatility has subsided significantly.
Crypto prices are now firmer after the FTX debacle
The FTX exchange filed for bankruptcy last Friday. Before this filing, FTX was one of the largest cryptocurrency exchanges. However, recent reports have alleged that the exchange mismanaged user funds, which caused a notable gap in the company’s finances.
Sam Bankman-Fried resigned as the CEO of the exchange and was replaced by John J. Ray, who has come out to state that the company’s financial situation is quite dire. The court filings further prove that FTX had a sinister relationship with Alameda, given that the latter was exempted from liquidations.
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