• Bitcoin experienced a large price increase in January, with some attributing it to institutional investors.
• According to CoinShares blog, the total assets under management in digital asset investment products had risen to $28 billion by Jan. 30.
• Matrixport believes that up to 85% of Bitcoin buying during January was due to U.S. institutional players.
Bitcoin’s Big Month
Bitcoin experienced an exceptional January, rising nearly 40%, with many attributing the surge to institutional investors entering the space. Assets under management for digital asset investment products rose to $28 billion, led by Bitcoin which was up 43%. Matrixport believes that up to 85% of Bitcoin buying during this month was due to U.S. institutional players as most gains were seen during U.S market hours and not Asian markets.
Net Institutional Inflows
CoinGecko’s head of research Zhong Yang Chan suggested there were net inflows into digital asset funds in January 2023, particularly in the last two weeks, with Bitcoin being the largest beneficiary of these investments. This can be attributed macro factors such as inflation growth pausing or technical reasons like short sellers being squeezed out of the market which drove more demand for BTC from institutions who already have experience investing in crypto currency or are interested in diversifying their portfolios beyond traditional markets and assets classes into crypto currencies and other digital assets like NFTs (Non Fungible Tokens).
U.S Institutional Players Driving Gains
This theory is further supported by a research report from Matrixport which stated that many investors used the U.S Jan 12th Consumer Price Index print “as a confirmation signal” to buy Bitcoin and other crypto assets leading them to believe that majority of these gains came from U.S institutions rather than Asian retail traders as almost all gains were made during US trading hours (85%).
Impact of Institutions on Crypto Markets
It is difficult however,to accurately quantify just how much influence these institutional investors had on driving prices but what we can learn from this example is that when big players enter into a market especially one still as nascent and volatile as crypto currencies it has potential ripple effects throughout entire industry signalling greater trust and legitimacy on service providers offering access into cryptos and wider adoption overall within mainstream finance circles which benefits everyone involved including retailers looking for better returns outside traditional markets especially those living in emerging economies where capital restrictions are tighter than developed countries limiting individuals ability invest their money elsewhere beyond their borders locally giving them more economic freedom when it comes accessing global financial markets previously out reachable before cryptocurrencies begun gaining traction back 2017 onwards since then both merchant services providers , exchanges , miners etc have all reaped huge benefits from increased trading volumes driven by increasing demand from both retail traders & institutions alike .
January’s BTC performance shows just how powerful institutional money can be when investing into cryptocurrency markets though this may not always be enough sustain long term pricing momentum if underlying fundamentals don’t remain strong so caution should always be taken when looking at short term charts prices only usually move upwards temporarily if there isn’t any real tangible use case or utility behind project itself which could potentially lead prices falling back down again quickly if no sustainable support remains present even despite having backing big name companies behind them ultimately what matters most sustainability is having good product backed well thought out development roadmap leading way forward into future building something people actually want or need today & tomorrow not just yesterday