Institutions Buy the Dip as Bitcoin Plunges 28%
As the weekend approaches, the crypto markets seem to have settled down after a tumultuous week that put institutional investors’ nerves to the test—particularly those new to the high-volatility world that seasoned digital currency traders are well accustomed to.
The week began with a sharp sell-off in bitcoin and ether, erasing $367 billion in value just as Japanese markets were plummeting. Yet, rather than retreating, these newer crypto investors seized the opportunity to buy the dip.
Spot ether exchange-traded funds (ETFs) witnessed net inflows of approximately $120 million this week, with most of the buying concentrated on Monday and Tuesday, when ether, the world’s second-largest cryptocurrency, had plummeted 42% from its March peak of over $4,000.
Although net flows for spot bitcoin ETFs were negative at the start of the week, data from crypto analytics firm CoinGlass reveals that demand began to pick up again by midweek. Over Wednesday and Thursday alone, these funds attracted more than $245 million. This influx of capital coincided with Morgan Stanley authorizing its 15,000 financial advisors to pitch clients—those with a net worth exceeding $1.5 million—on the crypto funds offered by BlackRock and Fidelity.
Morgan Stanley, one of the globe’s largest wealth management firms, is leading the charge on Wall Street by taking this bold step. Until now, wealth management firms have only executed crypto trades at the specific request of clients seeking exposure to these newly launched spot crypto ETFs.
According to a May 13F filing, Morgan Stanley, managing $1.5 trillion in assets, held about $270 million in spot bitcoin ETFs. The upcoming filing deadline on Wednesday will provide an updated glimpse into how much exposure banks and hedge funds now have to these spot crypto products.
The expectation is that other major financial institutions and asset managers, who have so far been conducting internal assessments of spot crypto ETFs, may soon feel compelled to follow Morgan Stanley’s example.
The spot ether ETFs, which have only been in the market for less than three weeks, have seen relatively modest inflows compared to the explosive debut of spot bitcoin ETFs in January. Bitcoin funds currently manage $54.30 billion in assets, compared to $7.25 billion across the spot ether funds.
Trading in Sync with U.S. Equities
For most of the week, the crypto market moved in tandem with U.S. equities. Since Monday, the total market capitalization of all cryptocurrencies has recouped hundreds of billions of dollars and now exceeds $2.1 trillion.
On Friday, bitcoin reached an intraday high close to $63,000, while ether was trading above $2,700.
More than $100 million in short positions on bitcoin were liquidated in the past 24 hours, contributing to bitcoin’s upward momentum.
Despite this recovery, both bitcoin and ether remain lower than they were seven days ago, with ether heading for its worst week in nearly two years.
