Crypto Market Finds Calm Amidst Institutional Investor Confidence

Crypto Market Finds Calm Amidst Institutional Investor ConfidenceAfter a volatile week, the cryptocurrency market has settled down ahead of the weekend. This weeks wild swings tested the mettle of institutional investors newly entering the crypto space, while for seasoned digital currency investors, such volatility is par for the course

Crypto Market Finds Calm Amidst Institutional Investor Confidence

After a volatile week, the cryptocurrency market has settled down ahead of the weekend. This weeks wild swings tested the mettle of institutional investors newly entering the crypto space, while for seasoned digital currency investors, such volatility is par for the course.

Earlier this week, a sell-off in Bitcoin and Ethereum wiped out $367 billion in market value as the Japanese market also plummeted. However, crypto traders were not deterred and instead chose to buy the dip.

Data shows that spot Ethereum exchange-traded funds (ETFs) saw aggregate net inflows of around $120 million this week, with the majority of the trades occurring on Monday and Tuesday when the world's second-largest cryptocurrency, Ethereum, dropped 42% from its March highs of over $4,000. While spot Bitcoin ETFs saw negative net flows since Monday, demand started to regain momentum mid-week with spot funds adding over $245 million on Wednesday and Thursday, according to cryptocurrency analytics firm CoinGlass.

Hundreds of millions of dollars began to flow into spot Bitcoin ETFs on the same day that Morgan Stanley approved its 15,000 financial advisors to start recommending funds issued by BlackRock and Fidelity to clients with net worths of over $1.5 million. Morgan Stanley, one of the world's largest wealth management firms, is the first major Wall Street firm to take this step. Previously, wealth management operations only facilitated deals when clients specifically requested exposure to these new spot crypto funds. In May, the firm disclosed in a 13F filing that it held around $270 million in spot Bitcoin ETFs out of its $1.5 trillion in assets under management.

Spot Ethereum ETFs, launched less than three weeks ago, have seen comparatively muted inflows compared to spot Bitcoin ETFs, which launched back in January. Bitcoin funds currently manage a total of $54.3 billion in assets under management while spot Ethereum funds manage $7.25 billion.

Throughout the week, the cryptocurrency market largely mirrored the fluctuations in the U.S. stock market. Since Monday, all tokens have recouped hundreds of billions of dollars in market capitalization, now exceeding $2.1 trillion. On Friday, Bitcoin peaked near $63,000 while Ethereum traded above $2,700. Over $100 million in Bitcoin short positions were liquidated over the past 24 hours, helping to support Bitcoin's rally.

While Bitcoin and Ethereum prices are significantly higher than their intraday lows of Monday, both assets remain in the red for the past seven days, with Ethereum experiencing its worst week in nearly two years. Several crypto-related stocks have witnessed a similar trend. Coinbase (COIN.US), MicroStrategy (MSTR.US), and Bitcoin mining firm Riot Platforms (RIOT.US) all recorded their third consecutive weekly decline.

The turmoil in global markets was exacerbated by the unwinding of yen carry trades earlier in the week, while lower-than-expected initial jobless claims data on Thursday eased recession fears. The S&P 500 Index posted its best performance in nearly two years on Thursday, with the cryptocurrency market following suit with a strong rally.

The regulatory winds appear to be shifting, with another judge siding with the cryptocurrency industry in its legal battle with the Securities and Exchange Commission (SEC). District Judge Analisa Torres ordered Ripple to pay a $1.25 billion civil penalty, far less than the $2 billion that the SEC had demanded.

Overall, despite the turbulent week in the cryptocurrency market, the confidence of institutional investors has not been significantly fazed, and the market has shown resilience. With the regulatory landscape gradually becoming clearer and as market fears of a recession subside, the cryptocurrency market is on track for a sustained period of healthy growth.