Institutional Investors Buy the Dip as China FUD Erupts

During the latest FUD (fear, uncertainty, doubt) in China, institutional investors bought the dips, with digital asset investment products generating $95 million worth of inflows last week.

A surge in bargain-hunting helped drive inflows into institutional crypto investment products for a sixth straight week, according to CoinShares’ weekly report on digital asset fund flows released Sept. 27.

Inflows of $95 million between Sept. 20 and Sept. 24 represented a 126% increase in weekly inflows. BTC and ETH investment products led the way with inflows of $50.2 million and $28.9 million, respectively.

While bitcoin investment products have seen outflows in 13 of the past 17 weeks, investor positive sentiment towards the asset has risen in September as inflows have been recorded in the past three weeks. Bitcoin product inflows also increased by 234% from the previous week.

Institutional demand for altcoins still appears to be strong, with products tracking Solana (SOL), Cardano (ADA) and Polkadot (DOT) seeing inflows of $3.9 million, $2.6 million and $2.4 million, respectively. Multi-asset funds also saw inflows of $6.4 million in the past week.

On September 24, the People’s Bank of China issued a notice announcing the ban on all cryptocurrency transactions, causing the price of Bitcoin to drop by 8%, while the entire crypto market saw a wider correction.

The latest measures by the People’s Bank of China prohibit financial institutions and payment companies from providing any services related to cryptocurrency transactions.

While FUD from Chinese regulators has historically had an impact on crypto markets, it has also served as a catalyst for price spikes or bull runs in the months following the announcement.

In September 2017, the Chinese government banned cryptocurrency exchanges from providing services to domestic users, while prohibiting citizens from participating in initial coin offerings. Following the double ban, the price of bitcoin climbed from the $4,000 range to an all-time high of around $20,000 at the time.

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