- Data from CoinShares shows crypto tracking products saw $95M inflows from institutional investors despite China’s ban on crypto transactions.
- China has, on multiple occasions, announced the news that caused negative investor sentiment, but the effects have always been reversed historically.
As the latest China-induced fear, uncertainty, and doubt (FUD) broke, institutional investors rushed in to buy the dip. Last week, cryptocurrency investment products had $95 million in inflows despite the market effect of the Chinese crypto ban.
Institutional crypto investments now marked the sixth week of consecutive inflows, CoinShares’ Digital Asset Fund Flows Weekly report indicates. Between Sept. 20 and Sept. 24, digital asset inflows saw a 126 percent weekly rise. Bitcoin (BTC) and Ether investment products dominated with $50.2 million and $28.9 million inflows respectively.
In 13 out of the past 17 weeks, Bitcoin investment products witnessed outflows. However, outflows have been reversed in the past three weeks, indicating positive investor sentiment toward Bitcoin this month. CoinShares now shows that Bitcoin inflows have surged by 234 percent week-over-week.
Moreover, investment products tracking altcoins have also had notable inflows. Solana (SOL), Cardano (ADA), and Polkadot (DOT) posted inflows of $3.9 million, $2.6 million, and $2.4 million respectively. Multi-asset funds also saw inflows of $6.4 million in the past week.
Institutional investors take advantage of China crypto Ban
Last Friday, the People’s Bank of China (PBoC) published a memo announcing a nationwide ban on all crypto transactions. Initially published on Sept. 3, the PBoC updated measures now illegalizing the provision of services related to crypto transactions by all financial institutions and payment firms.
The news triggered an 8 percent nose-dive in Bitcoin, along with a wider pullback to the rest of the crypto market. Historically, China-fueled FUDs have impacted crypto markets on 19 separate occasions. Since 2009, the nation first began banning virtual currencies then proceeded specifically to illegalize Bitcoin in 2013. Thereafter, similar bans followed besides an exchange hack for over 100,000 BTC, and allegations of ‘crypto bloodbaths.’
More recently, China’s second-largest property developer, Evergrande Group, hit the headlines with a possible default of its $300 billion debt. This event also drove a plunge in the crypto market.
Nevertheless, such fear-instilling announcements have also been associated with significant bull runs in the subsequent months. For instance, in Sept. 2017, Chinese authorities barred crypto exchange services in the country. Additionally, the government banned its citizens from taking part in initial coin offerings (ICOs). Shortly after the ‘double-ban’, BTC made a historic climb from about $4,000 to a then all-time high of about $20,000.
As of this writing, BTC was trading at $41,847, down 4.6 percent . The second-largest crypto by market cap, Ethereum (ETH) was exchanging hands at $2,907 after plummeting 6.7 percent in the day. The losses in the last 24-hours have been replicated in the wider crypto market. However, the latest data on crypto investment product inflows suggest a higher faith unbeaten by China’s bans or otherwise FUDs.