Investors ploughed $300 million into bitcoin last week as Terra's stablecoin went into meltdown
- Investors poured a record $274 million into crypto assets last week, even as terraUSD crashed, CoinShares found.
- The main driver was bitcoin, which logged $299 million in inflows during the crypto rout, it said.
Investors poured a record amount of money into crypto assets last week, even as the collapse in terraUSD spurred a wider market sell-off, according to CoinShares.
Leading cryptocurrency bitcoin was the biggest winner, logging $299 million in weekly inflows, CoinShares said in a report published Monday.
While outflows for ethereum, solana, polkadot and others weighed on the total, digital asset investment products overall saw $274 million in inflows in the week to May 13. That was the highest weekly tally this year, according to the report, which analyzes institutional digital-asset flows.
That was a "strong signal that investors saw the recent UST stablecoin de-peg and its associated broad sell-off as a buying opportunity," James Butterfill, investment strategist at CoinShares, said in his report.
Last week's brutal crypto rout was spurred by the collapse of stablecoin terraUSD (UST), which lost its peg to the dollar to tumble to as low as $0.30 on Wednesday. Its free-floating sister token luna also sank more than 97% in what analysts called a "death spiral" denting confidence in UST.
The sell-off dragged down bitcoin, which plummeted below $25,500 on Wednesday to its lowest level since December 2020. But its weekly inflows showed investors jumped into the cryptocurrency as its price slid.
"Bitcoin was the primary benefactor, with inflows totaling US$299m last week, suggesting investors were flocking to the safety of the largest digital asset," Butterfill said.
While leading cryptocurrency bitcoin racked up inflows, second-place ether saw $27 million in outflows as its price fell more than 20%. That brought monthly outflows to $42 million, and year-to-date to $236 million, in what Coinshares described as a "steady trickle out".
Solano also dragged on the overall total, with just above $5 million leaving the coin, while polkadot shed $0.6 million.
Cryptocurrencies have fallen in 2022 so far as investors wavered on high-risk assets as the Federal Reserve curtails its ultra-easy money policy in an effort to combat sky-high inflation.
In addition, the CEO of crypto company Circle and others have suggested that Terra's downfall may well prompt lawmakers to move faster on bringing in crypto regulation, given many retail investors logged big losses as UST and luna lost almost all their value. That has left some increasingly pessimistic about the future of the sector.
Last week, a lack of confidence was seen in areas outside cryptocurrencies, according to CoinShares.
"Blockchain equity investors panicked, with outflows totaling US$51m, the third largest outflow on record," Butterfill said.