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Friday, February 3, 2023

The FTX Collapse Has Also Seen A Large Inflow In Crypto Funds

The marketwide collapse that was triggered by the bankruptcy declarations of FTX and Alameda Research led to a massive inflow into the investment productions of cryptocurrency.

This is simply because most of the institutional investors purchased the dip despite the collapse. The products involved in digital asset investment also saw inflows which had a total sum of $42 million in the week that ended on the 13th of November- which was also the largest increase the industry saw in around 14 weeks, according to data from CoinShares. The investment products of Bitcoin did see the largest inflow at around $19 million, which was then followed by multiasset and Ether funds at $8.6 million and $5.9 million. 

FTX Collapse In The Crypto Market Has Led To Massive Inflows

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The market of cryptocurrency did face some sell-side pressure the previous week as the FTX Exchange filed for bankruptcy which succeeded in a run on its assets. The bank run was also triggered by the sudden liquidation o the FTX token by Binance on the 6th of November. The CEO of Binance, Changpeng Zhao went on to express massive interest in purchasing the collapsing derivatives exchange but backed out of it in just a day due to a massive hole in the finances of the exchange. Since then, it has been reported that this exchange is sitting on a liability sum of $8 billion. 

Most of the market investors have also been betting on a further collapse in the market conditions, which could partially be due to the bankruptcy filing by FTX. This will lead to short Bitcoin products that register a sum of $4.8 million in its weekly inflows. It has also been documented that although most of the investors were looking towards purchasing products that could lead to crypto investment, the outlook on most of the blockchain equities soured swiftly. 

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