Digital asset fund inflows increasing, capitulation done?
Digital Asset Fund Flows Report • November 08, 2022
The year 2022 has unquestionably been a rocky year for digital investments so far, however the tide might be turning. In the face of a tough macro-environment, there are signals that capitulation is in. Where you are looking at capitulation indicators, there are plenty:
- Tesla selling 75% of their digital assets at a loss - Poorly managed crypto companies announcing heavy restructuring and/or chapter 11 bankruptcies - Coinbase and publicly listed bitcoin mining companies having a drawdown between 70-90% of their market capitalisation - Miner capitulation selling off (part of) their bitcoin - Crypto-asset prices falling below 2017 cycle peaks
The tough macro-environment and uncertain geopolitical environment do not guarantee that mid-term bottoms are in. However, there are positive signs signalling more crypto interest in the broader markets. Coinshares research reports digital asset investments having positive inflows for the fifth consecutive week totalling over 500 million inflows in digital asset funds representing the biggest monthly inflow of 2022.
The July inflow in digital asset funds almost completely corrects the June outflow the month prior. Interestingly enough, multi-asset funds still show a decline while single-asset funds do not. This might be a sign that investors are pickier in what they invest in, instead of broad-based indexes. Nevertheless, if you are looking to allocate a (small) portion of your portfolio to crypto assets, it might be a wise idea to dollar cost average to not be caught off guard by high volatility.