Investor Confidence in the Digital Asset Market is on the Rise

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Investor Confidence in the Digital Asset Market is on the Rise

Investors seem to be regaining confidence in the digital asset market and are putting more money into crypto funds than in recent months, according to CoinShares. The company reported that inflows of $76 million entered crypto funds last week, marking the fourth consecutive week of such movements, primarily into funds such as Grayscale, 3iQ, and 21 Shares.

Change in Investor Sentiment Since Early 2023

In contrast, late last year and early 2023 saw investors withdrawing money from exchange-traded products and similar crypto-investments, largely due to the bear market exacerbated by the collapse of the FTX exchange in November.

However, CoinShares reports that there has been a "change in investor sentiment since early 2023."

Assets Under Management on the Rise

Total investment assets under management have risen 39% from this time last year, standing now at $30.3 billion, the highest since August 2022.

The majority of investors are focusing on the biggest digital assets, with Bitcoin being the primary focus. CoinShares reports that "Bitcoin continues to be the primary investor focus, with inflows totalling $69 million, representing 90% of the total flows for the week." “We’re starting to see some bold investors come in [and] take . . . long positions, and people are not adding to short positions now,” said James Butterfill, head of research at CoinShares.

Reasons for Improving Sentiment

Head of Research at CoinShares, James Butterfill, attributes the change in investor sentiment to the softening of the US monetary policy stance and the weakening of the dollar. The US central bank's aggressive interest rate hikes last year aimed to curb high inflation, but the Fed has since softened its approach.

Traders are now eagerly awaiting any announcements from Federal Reserve Chairman Jerome Powell regarding the bank's future moves.

Market Performance

Despite the optimism in the digital asset market, US stocks, Bitcoin, and other cryptocurrencies saw a dip yesterday.

According to CoinGecko, the largest digital asset by market cap, Bitcoin, is currently trading at $23,000, down 0.3% in the last 24 hours.