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Institutional police return Bitcoin after weeks of collecting altcoins

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Institutional investors are returning to digital gold with Bitcoin (BTC) investment products, seeing inflows for the third straight week.

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Institutional investors are returning to digital gold with Bitcoin (BTC) investment products, seeing inflows for the third straight week. According to recent data latest weekly report on Digital Asset Fund flows, BTC investment products generated $68.7 million inflows between September 27 and October 1. While BTC tracking products have dominated digital asset inflows for the second week in a row, the recent upward trend has come from a series of record outflows that lasted for eight consecutive weeks through early September. Total inflows for digital investment products this week were $90 million, marking the seventh week of inflows as institutional investors continue to increase their exposure to digital assets.

Institutional investors also account for the bulk of Ethereum (ETH) investment products, with a total inflow of $20.2 million. BTC and ETH products are up around 7.4% and 3.2%, respectively, for the week. There was also mixed appetite for altcoins last week. Tracking products Cardano (ADA) and Solana (SOL) reported inflows of $1.1 million and $700,000, respectively, while funds Polkadot (DOT) and Binance Coin (BNB) allocated $800,000 each. Multi-asset funds also saw a minimum inflow of $1.9 million. Solana's institutional demand appears to have bottomed out and product inflows are following a 98% decline in SOL after peaking at $38.9 million in five weeks. Despite the rebound in the market following the forced drawdown in July, reports emphasized that last week's trading volume was $2.4 billion.

There were estimates that institutional asset managers currently represent $57.1 billion in combined assets under management (AUM), up 8.5% on a weekly basis. Grayscale continues to dominate the sector, accounting for $41.1 billion, or 71% of the sector's total assets managed. XBT and Purpose ranked second and third with $2.2 billion and $2.1 billion in assets under management, respectively. In the stock market and crypto sector, traders are always looking for reasons to explain the effect of asset prices, so it is important to emphasize that correlation does not imply a causal relationship.

While it may be easy to attribute pending government statements or legislation to asset price results, there is not always strong evidence that this is the right engine. Some of the indicators described below may appear simply by luck, even if luck has persisted throughout history. For example, the $48,200 Bitcoin (BTC) pump on October 1 could be linked to a statement made by Federal Reserve Chair Jerome Powell on September 30. When asked to clarify his comments on Central Bank digital currencies (CBDC), Powell confirmed that the Fed has no plans to ban cryptocurrencies.

Another plausible reason for the current rally is Bitcoin's 7-day hashrate, which soared to 145 Ekhash per second (EH/s), the highest since a sudden slump in early June when the battle against mining broke out in China intensified. Lastly, rising expectations of the US Securities and Exchange Commission (SEC) approval of the Bitcoin Exchange Traded Fund (ETF) may have played a significant role in the recent bullish bet on traders. It's clear that a number of factors could have brought the pump to $49,000 last week, and today it looks like bulls are trying to get back $50,000. So, let's take a look at 3 indicators that trigger buy signals before the recent price movement.

UNI, the decentralized exchange token for Uniswap, was pumped hours before the market rally on October 1. Altcoins started rising from UTC shortly after the close of the month, initially 5% to $24.20 from $23. The move was followed by another 4% pump to $25.20 three hours before Bitcoin broke above $45,000. Interestingly, DEX volumes started to spike after China imposed additional restrictions on bitcoin the previous week. A plausible explanation for this move may be because investors are beginning to understand that China's actions will not affect trading volume. Migration to DEX will severely limit the ability of governments to control or limit cryptocurrency adoption.

UNI, the decentralized token for Uniswap, was pumped hours before the October 1 market rally. The move was followed by another 4% pump to $25.20 three hours before bitcoin broke above $45,000. Interestingly, DEX volumes started to spike after China imposed additional restrictions on bitcoin last week. A possible explanation for this move is the fact that investors are beginning to understand that China's actions will not affect trading volume. Migration to DEX will severely limit the ability of governments to control or limit cryptocurrency adoption.

Regardless of the basis, futures contracts always combine a long (buyer) and short (seller). This means it is impossible to predict whether these investors will be skewed on either side. The sudden spike in open interest, reflecting the total number of contracts still in force, is a reflection of confidence. The higher the draft included, the higher the stakes. Notice how during the 4 hours before 6:00 am UTC increases both the USDT Perpetual and Coin contracts open interest rates. Interestingly, even with the additional $400 million stakes, the Bitcoin price was only noticeably affected after open interest peaked.

The truth is that you may never know exactly what caused the rally, but by observing similar patterns in the future, traders may be able to predict a price increase. Of course, there is no guarantee that all three indicators will repeat themselves, but the cost of monitoring data is minimal.

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