According to CoinShares, investors poured in record amounts of money last week into crypto assets, even though the collapse of terraUSD prompted a wider market selloff.
Bitcoin was the leading cryptocurrency, with $299 million in weekly transactions, coinShares reported in a report.
Outflows for Ethereum Solana, Polokadot, and other investment products weighed on the total. However, overall digital asset investments products saw $274 million of inflows during the week to May 13th. According to the report which analyses institutional digital-asset flows, this was the highest weekly total for the year.
This was a strong signal that investors saw the recent UST stabilitycoin depeg and its associated wide sell-off,’ James Butterfill (investment strategist at CoinShares) stated in his report.
The last week’s brutal cryptocurrency rout was triggered by the collapse stablecoin TerraUSD (UST), which fell to $0.30 on Wednesday after its peg to USD2_. Analysts called it a ‘death spiral’ that dented confidence in UST. Its sister token luna also dropped more than 97%.
Bitcoin fell below $25,500 on Wednesday, its lowest point since December 2020, as a result of the sell-off. However, its weekly inflows revealed that investors jumped into cryptocurrency even as the price fell.
Butterfill stated that Bitcoin was the main beneficiary, with inflows of US$299m over the last week. This suggests that investors were flocking towards the security of the largest digital asset.
The top cryptocurrency bitcoin saw a surge in inflows. Second-place Ethereum saw $27 million in outflows due to its lower price of more than 20%. This resulted in monthly outflows of $42 million and a total of $236 million for the year. Coinshares called this a steady trickle out.
Solano also delayed the total with just over $5 million being left the coin while polkadot lost $0.6 million.
In 2022, cryptocurrencies fell as investors strayed from high-risk assets. The Federal Reserve has curtailed its ultra-easy money policy to combat skyrocketing inflation.
The CEO of crypto company circle, along with others, suggested that Terra’s demise may prompt lawmakers to act faster on introducing crypto regulation. This is because many retail investors suffered huge losses when UST and luna lost nearly all their value. Some are now more pessimistic about what the future holds for the sector.
According to CoinShares, last week there was a lack confidence in areas other than cryptocurrencies.
Butterfill stated that “Blockchain equity investors panicked” with outflows totaling US$51m. This was the third largest outflow ever recorded.