By Yasin Ebrahim
Investing.com – Bitcoin fell Tuesday, pressuring the total cryptocurrency market cap further under the $1 trillion market, but market participants continue to suggest the path of least resistance remains higher amid data pointing to strong underlying demand for popular cryptocurrency.
Bitcoin fell 4.74% to $10,897, but remained below its session high of $12,153.
The value of the total crypto cap fell further below $1 trillion to $952.11, though data from Coinshares showed investment inflows hit a record of $1.3 billion over the past week following a period of minor outflows, CoinShares noted.
The growing interest in bitcoin from intuitional investors comes as the popular crypto has shown clear "portfolio diversification benefits," and fits into trend of Wall Street investments into the digitization, Coinshares chief executive Jean-Marie Mognetti, said in a CNBC interview on Tuesday.
The demand, however, remains heavily skewed in bitcoin's favor even as Ethereum's surge to all-time highs has garnered some of the spotlight of late. Bitcoin attracted about 97% of total crypto inflows so far in 2021, CoinShares said in a report released earlier this week.
In a sign that 'hodl' in bitcoin is paying off, Wave Financial, the digital assets unit of Wave Financial Group, reported returns that more doubled in its first year of trading.
The Wave BTC income & growth digital fund, which uses a call options strategy to trade on bitcoin’s volatility, posted 145.8% annual returns following its first full year of trading.
"WBIG is a fund that is specifically designed to provide investors with significant exposure to bitcoin, whilst offsetting volatility from such exposure and with the aim of generating a stable return," said Matteo Dante Perruccio, president international at Wave.
Still, others point to signs of a slowing pace of funds in more sizeable funds like Grayscale's $20 billion bitcoin trust as a reason that the largest crypto will remain in a period of consolidation after piercing above the $40,000 level earlier this month.
The pace of inflows into the $20 billion Grayscale Bitcoin Trust "appears to have peaked" based on four-week rolling averages, JPMorgan (NYSE:JPM) strategists led by Nikolaos Panigirtzoglou said in a note last week.
"At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000," JPMorgan said.
Looking ahead, there is "risk is that momentum traders will continue to unwind Bitcoin futures positions," the strategists added.