Cryptocurrency Investments Top $5.6 Billion in 2020, Up by 600 Percent: Report

Total investor inflows into cryptocurrency funds and products hit $5.6 billion (roughly R. 41,400 crores) so far this year, up more than 600 percent from 2019, according to the latest data from asset manager CoinShares.

The inflows plus the latest price moves lifted assets under management for the sector to nearly $19 billion (roughly Rs. 1,40,300 crores) in 2020. Assets under management ended 2019 at just $2.57 billion (roughly Rs. 19,000 crores).

Interest in cryptocurrencies skyrocketed this year as investors saw bitcoin as a hedge against inflation and as an alternative to the depreciating dollar.

Bitcoin hit yet another all-time peak of $24,298.04 (roughly Rs. 17.9 lakhs) on Sunday, but was last down nearly 3 percent at $22,832.78 (roughly Rs. 16.8 lakhs), hit by a wave of risk-off moves in financial markets on worries about the new coronavirus strain.

On Monday ethereum, the second largest cryptocurrency, fell 4.4 percent to $610.14 (roughly Rs. 45,000).

Inflows into investment crypto investment products totaled $335 million (roughly Rs. 2,500 crores) as of Friday, with bitcoin flows accounting for $792.1 million (roughly Rs. 5,900 crores), the data showed. Ethereum had $207.3 million (roughly Rs. 1,500 crores) in weekly flows.

So far this year, investors pumped $15.6 billion (roughly Rs. 1,15,200 crores) into bitcoin products and funds, while ethereum inflows reached nearly $2.5 billion (roughly Rs. 18,500 crores).

"It's no secret that there are a few big players in the bitcoin/crypto space and that it is mostly crowded with retail-related traders and investors," said Julius de Kempenaer, senior technical analyst at StockCharts, a technical analysis and financial charting platform for online retail investors.

"The current jump will certainly attract new retail money, but we are also already seeing adoption by more institutions. I think the question is whether institutions can afford not to participate, and for how long," he added.

Grayscale, the world's largest crypto fund, had $250.8 million (roughly Rs. 1,850 crores) inflows in the latest week, raising its assets under management to $15.3 billion (roughly Rs. 1,13,000 crores). So far this year, Grayscale has amassed inflows of nearly $5 billion (roughly Rs. 36,900 crores), the CoinShares report said.

Trading volume for bitcoin hit a record $11 billion (roughly Rs. 81,200 crores) on trusted exchanges on December 17, but slowed over the weekend. Turnover, however, remained at above the average of $4 billion (roughly Rs. 29,500 crores) on Saturday and Sunday.

© Thomson Reuters 2020

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