Institutional Bitcoin products tag record AUM despite volume pulling back

Institutional bitcoin products continue to grow despite a pullback in the market, but are they really doing what they were introduced for?

Institutional demand for Bitcoin has increased despite volume pulling back. The institutional demand is not just limited to the trading of cryptocurrencies, but also includes the trading of futures contracts and other derivatives.

Despite transaction volume dropping in the second half of 2021, institutional traders have invested a record amount of money in Bitcoin investment products.

Bitcoin (BTC) investment products received total inflows of $97.5 million between Nov. 8 and Nov. 12 according to CoinShares’ Nov. 15 “Digital Asset Fund Flows Weekly” report, bringing the sector’s assets under management (AUM) to a new high of $56 billion. Last week, year-to-date (YTD) inflows totaled $6.5 billion.

Last week, bitcoin instruments accounted for 64.6 percent of the $150.9 million invested in digital asset investment products. While the record AUM coincided with BTC hitting a new all-time high of over $69,000 on Nov. 10, the markets have since come down by 10%, with the currency last changing hands for $62,100.

Despite the fact that digital asset investment products have experienced inflows for 13 weeks in a row, the industry has witnessed “subdued volumes” in the second half of 2021, according to CoinShares.

Daily volumes have averaged $750 million in the second half of the year, down 22% from $960 million in the first half of 2021, according to the study.

With $17.3 million in weekly inflows, Ethereum had the highest weekly inflows among altcoin-tracking products, but the result represented a 44 percent drop week-over-week for the asset class. Despite the lack of traffic, CoinShares reported a record AUM of $21 billion for Ethereum products, and the price of ETH hit new highs at $4,900 on November 10th.

Cardano (ADA) came in second with $16.4 million, representing a 227 percent increase in weekly inflows. CoinShares claimed it couldn’t “find an identifiable reason” causing the surge in Cardano fund investment.

Despite transaction volume dropping in the second half of 2021, institutional traders have invested a record amount of money in Bitcoin investment products.

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The price of ADA jumped significantly this week, from roughly $2.00 on November 8 to around $2.36 on November 10. Cardano’s price, however, dropped to $2.11 on Friday. ADA is still down 46% from its all-time high of $3.09 in September.

Inflows of $9.8 million, $5.2 million, and $3.1 million were seen in Solana (SOL), Polkadot (DOT), and Ripple (XRP) investment products, respectively, during the week.

Despite the pull back in cryptocurrency volume, institutional Bitcoin products have been able to maintain a record AUM.

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