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Crypto Market Sees Highest Capital Inflow In 2 Years, What This Means

Despite the year drawing to a close, crypto investors are not slowing down their activities in the space. In fact, the reverse is the case as money is flowing back into the market at an unprecedented rate. Over the last few months, inflow into the crypto market has climbed and now, it has touched its highest level in the last two years.

Crypto Inflows Cross $24 Billion

Crypto analyst Ali Martinez took to the X (formerly Twitter) platform to inform investors of an interesting development in the market. According to the analyst, the total capital inflow into the market has now crossed the $24 billion mark.

The chart shared by the analyst shows a steady increase in capital inflow, going from negative values just before October to rising to tens of billions by December. The post which was made on December 25 showed that the capital inflows were sitting at $24.2 billion.

Now, this is significant because the last time that this happened was back in December 2021. This increase shows a willingness from investors to move back into the market instead of taking out money. This is also corroborated by the digital asset investment products which saw more than $103 million in inflows last week alone.

Total market cap at $1.6 trillion | Source: Crypto Total Market Cap on Tradingview.com

What Does This Mean for Digital Assets?

Looking at historical performance shows that a surge in capital inflows can be very good for the prices of digital assets. When the capital inflow levels were this high back in December 2021, it preceded another impressive run going into the month of January in the following year. As a result of this surge, prices of cryptocurrencies such as Bitcoin saw a rise.

However, this is not entirely bullish given that there have also been declines not too long after capital inflow surges. Usually, times like these are when euphoria is at its peak which means that investors could be panic-buying while those who have bought at lower prices begin to dump their tokens on newer investors.

Following the capital injection in December 2021, the price would tank around two months later as outflows began to dominate the market. However, this outflow may be short-lived before the bullish narrative takes over once again.

If the trend from 2021 holds, then the market could be looking at another month of upward trajectory before prices tank once more. In such a case, the Bitcoin price could rise as high as $50,000 and then correct back downward in the months leading up to the halving event.

Featured image from Storm Gain, chart from Tradingview.com




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