Crypto funds’ bitcoin holdings grow as demand rebounds

Fund managers have added back nearly 4,000 bitcoins, with holdings higher than 692,000, or about $20bln worth

Digital asset-based trusts and funds have enhanced their bitcoin holdings as investor demand has bounced back during the weeks after a number of bank failures.

According to data from crypto analytics firm CryptoQuant, the volume of bitcoin (BTC) held by digital asset managers like trusts and exchange-traded products (ETP) began to decline steeply during early March, falling below 688,000 bitcoins on March 14 immediately after the failures of Silvergate Bank, Signature Bank and Silicon Valley Bank.

In the weeks since, though, these fund managers have added back nearly 4,000 bitcoins, with holdings higher than 692,000 as of April 2, or about $20bln worth at the current price just higher than $28,000.

According to recent reports, trust has come back to holdings, CryptoQuant analyst Grizzly wrote in a note on March 31.

He noted that widespread postulation the U.S. Federal Reserve has reached the end of its interest rate hike cycle has convinced investors to boost their holdings.

While Fed Chair Jerome Powell gave no guarantees of a halt at his last press conference in late March, the CME FedWatch Tool currently shows 58 per cent of traders are not expecting a rate increase at the next FOMC meeting in May.

Investors appear to be adopting a wait-and-see attitude since the initial rush back into bitcoin, James Butterfill, head of research at European digital asset manager CoinShares, told CoinDesk. It still is not clear if the Fed’s bailout program has stemmed the run on banks.

We believe (the Fed) has only kicked the can down the road and that the Fed is stuck between not hiking rates and creating an inflation problem, or hiking rates and creating a banking crisis, Butterfill further said. Either way, it is likely to be helpful for bitcoin in the longer run.