Inflows into Crypto Funding Merchandise Hit Highest since FTX Collapse

Weekly Inflows of Digital Assets Hit Their Maximum Amount Since the November Collapse of FTX

The average weekly inflows into funding products based on digital assets reached $36.8 million in January, the highest amount since the collapse of the once-dominant cryptocurrency exchange FTX in November of last year, according to UK-based CryptoCompare’s Digital Asset Management Report for January 2023. Additionally, according to CryptoCompare, the total assets under management (AUM) for financial products including digital assets increased by 36.8% in January compared to the previous month, reaching a record-breaking $19.7 billion.

CryptoCompare said the optimistic mood was “pushed by liquidated short positions and a healthy macro environment, as reflected in the recent CPI announcement, which saw Bitcoin’s price reach $23,000; its highest level since August 2022.” AUM continues to “substantially” lag behind the January 2022 figure despite the trend because of the decline in both the traditional and cryptocurrency asset markets in 2022.

According to data released by CryptoCompare, Grayscale’s Bitcoin Trust (GBTC) ranked first among Bitcoin trusts in January. The trust’s assets under management increased by 38.4% to $14.5 billion in January compared to the previous month. Grayscale Investment, a division of Digital Currency Group (DCG), is in charge of managing GBTC. According to CryptoCompare, despite the ambiguity surrounding Genesis Trading, trust is still high. Due to a “liquidity crunch” that occurred in mid-November, DCG’s cryptocurrency lender Genesis Global Capital, which is also owned by two other companies, requested an emergency $1 billion loan. Two weeks ago, the company filed for bankruptcy in a Manhattan court. In addition, three Gemini Earn customers have requested class action arbitration against the lender for allegedly failing to return their assets, and the cryptocurrency exchange Gemini and Genesis are currently at odds over the payment of a $900 million debt related to the Gemini Earn programme. Recently, Gemini and Genesis were both accused by the US Securities and Exchange Commission for allegedly selling securities that were not registered.

According to CryptoCompare, there hasn’t been much of a narrowing of the discount on Grayscale’s GBTC Trust, even with increases in trading volume and AUM. Given that its sister company Genesis announced its bankruptcy in January as a result of its exposure to FTX and the ongoing litigation against the SEC to convert the Bitcoin Trust into an ETF, the position is still precarious.

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