Crypto market struggles in $2 trillion market cap quest as investors cling on Bitcoin ETF approval
- Benjamin Cowen of Into The Cryptoverse says investors could be rotating money from altcoins to Bitcoin.
- The cumulative market cap is close to $1.3 trillion, far from the $2 trillion capitalization reached in 2021.
- Crypto assets received more than $66 million in new capital over the last week.
Crypto investors seem to be making strategic moves by shuffling their funds between Bitcoin and alternative cryptocurrencies, popularly known as altcoins, according to Into The Cryptoverse founder Benjamin Cowen. This trend can essentially mean that there is a lack of a significant influx of new money to the overall crypto market, making it difficult to achieve the $2 trillion market cap once again in the short run.
Lack of new crypto money
Cowen's post on X suggests that investors are not pouring fresh capital into the crypto space but rather rearranging their existing investments. He explains that similar global market capitalization levels were seen in April and July, when the market failed to break it.
While there is a lack of substantial new investments, crypto assets still managed to attract more than $66 million in fresh capital last week. CoinShares reported that digital asset investment products experienced inflows for the fourth consecutive week. Around 84% of these inflows were for BTC, largely attributed to the frenzy surrounding a spot Bitcoin ETF launch in the United States. However, the platform highlighted that these inflows are relatively modest compared to those witnessed in June.
BTC ETF to bring fresh capital
Since the last quarter of 2021, when the cumulative crypto market capitalization surpassed $2.5 trillion, investors have either reduced their exposure or exited it entirely.
Bitcoin (BTC) continues to hover under the $34,000 level after the news of the disappearance of the iShares Bitcoin Trust ETF listing on the DTCC (Depository Trust & Clearing Corporation) website made rounds. Even after it was confirmed that the ETF has been listed again, the price hasn't shot up massively from the previous levels.
Charles Yu, a research associate with Galaxy Digital, estimates the total addressable market size for Bitcoin ETFs to be around $14.4 billion in the first year after launch before the number ramps up to $39 billion in the third year. He arrived at this figure by using the relationship between Gold ETFs and the price of the yellow metal as a reference.
Yu highlights that as of September 30, approximately 842,000 Bitcoin, equivalent to roughly $21.7 billion, were held in Bitcoin investment products, including ETPs and closed-end funds.
The cryptocurrency market is likely witnessing a pattern of investors shifting their funds between Bitcoin and alts at the moment. This makes it challenging to reach the coveted $2 trillion market cap in the near term. However, substantial inflows into Bitcoin's spot markets could trigger more investor interest in the broader sector, bringing fresh money for the alts.