• Thu. Apr 18th, 2024

Polkadot Sees Strong Institutional Interest

May 26, 2021

During this recent bearish weather in the crypto market, it appears that Polkadot has managed to outperform the rest. This year during the boom of cryptocurrencies, notwithstanding numerous crypto protocols enjoying sold returns, Polkadot has still managed to shine brighter than most. As the top coin, Bitcoin has received the most acclaim and is followed by Ethereum, which facilitates most of the decentralized finance (De-Fi) protocols that exist today. In the first quarter, they rose by 90% and 470%, but Polkadot appears to be rising up in terms of both market capitalization as well as wider retail and institutional interest. 

All digital currencies other than Bitcoin are referred to as altcoins and they have attracted the attention of investors. More and more people are searching for coins that boast a differential value along with Bitcoin, or those that could be ‘Ethereum killers’. Launched in May 2020, Polkadot has quickly become one of the most popular next-generation blockchains. CoinShares, a digital asset management firm, recently published a report, which showed that institutional investors are exhibiting greater interest in proof-of-stake (PoS) coins. Polkadot and Cardano have turned out to be the biggest winners when it comes to net inflows. As per CoinShares, Polkadot and Cardano are popular ‘Ethereum killers’ due to which they took the lion’s share of the net inflow in the growing altcoin space worth $27 million.

Almost $10 million was directed towards Cardano, while there was a $7 million inflow in Polkadot investment products. As far as its multi-asset capability is concerned, it brought in $5.5 million. The title of the report was Digital Asset Fund Flows and it noted that there had been net outflows seen in most digital asset investment products for a second consecutive week, which was around $97 million. This is around 0.2% of the total flows associated with the crypto market. 

The continued outflows were tied by CoinShares to the increasing regulatory uncertainty that surrounds cryptocurrencies, along with the environmental concerns relating to Bitcoin. According to the report, there was a fall in Bitcoin holdings by $111 million when it comes to assets under management (AUM). It was pointed out by CoinShares that these numbers were a lot better than last week, which had seen Bitcoin AUM fall by $115 million. Ethereum, the platform for Dapps (decentralized applications) wasn’t spared either, even though it didn’t lose by the same extent. According to the estimates by CoinShares, there were outflows of $12.5 million in the second-most valuable cryptocurrency after receiving record inflows. 

To date, the inflows in Ethereum are valued at $924 million. However, there seems to be a shift in paradigm taking place in the industry, as environmental concerns are pushing people away from well-established digital currencies like Bitcoin and Ethereum, towards protocols that are more energy-efficient. Due to the increasing interest in PoS coins, FD7 Ventures, the crypto investment fund based in Dubai has swapped nearly 75% of its Bitcoin’s holdings for DOT and Cardano’s ADA. Likewise, Osprey Polkadot Trust was also launched by Osprey Fund to provide high net worth investors with greater crypto exposure. 

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