Truth in Crypto

Understanding Fund Flows in Crypto Land

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Andrew Elliott

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On October 9th I posted an article entitled, Bitcoin Rally Burns Other Cryptos- Flow of Funds.

Today we are witnessing the opposite of that fund flow, where funds are moving out of Bitcoin and into other crypto assets. Understanding fund flows in Crypto Land is important when building an investment (accumulation) or trading (actively buying and selling) strategy.

Let’s take a look at the Top 10 Crypto Assets by market capitalization (Coinmarketcap.com). At this moment, only Bitcoin and BitConnect are negative , while the other assets are all positive by at least 2.96%. In fact if we were looking at the Top 35 Crypto Assets, Bitcoin and Bitconnect would still be the only assets currently negative.

 

 

These positive fund flows for the other cryptos are not new money entering the crypto space, its money moving out of Bitcoin and into the other assets. We can validate this conclusion by looking at the total market capitalization of the entire space (below). Notice the figure is relatively flat over the past 1 day period.

 

So What?

It seems in the current environment:

-When Bitcoin is rallying significantly higher, then accumulate other crypto assets that you have on your “buy list” as they are most likely being sold to fuel the Bitcoin buying.

…Alternatively…

-When Bitcoin is under pressure (being heavily sold), understand that the money that will fuel the next upswing in Bitcoin has a history of coming from selling of smaller crypto assets. Therefore, time your sell orders more effectively (if trading).