U.S. labor market figures have almost ceased recruitment
In the first quarter of 2023, the crypto market witnessed a mixed bag of trends, with Bitcoin demonstrating resilience and maintaining dominance, while altcoins like Ethereum, Solana, Ripple, and others faced challenges.
According to a report by CoinShares, Bitcoin-based products attracted $214 million over the week and a cumulative $797 million so far this year. This strong performance can be attributed to a somewhat more favorable macroeconomic environment towards the end of Q1, including stabilizing inflation and a pause in U.S. rate hikes. This environment helped Bitcoin to recover and even set new highs, attracting institutional interest.
On the other hand, Ethereum funds experienced a significant outflow of $255.6 million, with CoinShares attributing this to Ethereum's high sensitivity to sell-offs in U.S. tech stocks.
Meanwhile, funds based on Aave attracted $2.9 million, and clients invested another $1.8 million in funds that allow shorting bitcoin. Instruments focused on XRP saw an inflow of $41.2 million, and funds based on Polkadot attracted $1.6 million. Solana-based products received a total of $15 million, with no dependence on the dynamics of the stock market observed. Funds based on Stellar attracted $2.7 million.
Experts link the inflow of funds into XRP to market optimism surrounding the approaching deadline for the SEC's appeal on the token's status. However, the overall market and venture capital environment suggest that Bitcoin was the main beneficiary of favorable macro factors, while Ethereum, Solana, Ripple, Aave, Stellar, and Polkadot funds faced more challenges.
The U.S. macroeconomic indicators, such as inflation levels, Federal Reserve policy, and dollar strength, had a mixed but generally cautious impact on crypto investment funds focusing on Bitcoin, Ethereum, Solana, Ripple, Aave, Stellar, and Polkadot. Venture capital investment was cautious and focused on infrastructure and security rather than speculative altcoin projects.
Analysts estimate that before the publication of the "hawkish" Fed protocol (January 8), there was an inflow of around $1 billion. However, the U.S. December jobs report (January 10) led to a revision of expectations regarding further interest rate hikes, causing investors to withdraw $940 million. The 'honeymoon period' related to the U.S. election results is over, and macroeconomic indicators are again the key driver, according to specialists.
In sum, the first quarter of 2023 saw renewed investment confidence in Bitcoin, with Ethereum and other altcoins facing more challenges. The approach of the SEC's appeal on the XRP token's status may be influencing the market, with funds based on XRP seeing an inflow of investments. The macroeconomic conditions tempered enthusiasm for speculative altcoins and projects building on Ethereum, Solana, Aave, Stellar, and Polkadot ecosystems, though infrastructure and security sectors still attracted significant investments. Cumulative inflows into crypto funds in 2024 reached a record $44 billion.
What about technology's role in investing? The inflow of funds into XRP, a technology-based cryptocurrency, may suggest a growing interest in technology-focused investing, as experts link the inflow to market optimism surrounding the approaching deadline for the SEC's appeal on the token's status. Despite this, the overall market and venture capital environment suggest that Bitcoin, a finance-focused asset, was the main beneficiary of favorable macro factors, while Ethereum, Solana, Ripple, Aave, Stellar, and Polkadot funds faced more challenges, indicating a possible preference for established finance assets over newer technology-focused ones.
