Institutional investment flows out of ETH and into competing L1 altcoins

Analysis from CoinShares shows investors favored smaller altcoins last week as capital outflows for Ethereum hit $17 million. Institutional investors have shifted their attention from Ethereum (ETH) to competing Layer 1 blockchains of late, with capital inflows for altcoin investment products increasing last week whilst Ether products posted outflows for the third week in a row. Data from CoinShares’ latest Digital Asset Fund Flows report shows that investors last week (ending April 22) loaded up on $3.5 million worth of Avalanche (AVAX), Solana (SOL), Terra (LUNA) and Algorand (ALGO) funds whilst capital outflows from Ether products totaled $16.9 million. It marks the third straight week that Ethereum products have seen outflows, bringing the total over that time to $59.3 million, equal to around 35% of the year-to-date outflows of $169 million from the second-largest blockchain.

Notably, investors also favored digital gold last week despite some recent hesitancy, with Bitcoin (BTC) products fetching $2.6 million worth of inflows.

Over the past 10 weeks, inflows to Ethereum products have reached only $68.5 million in what could signal a bearish trend by institutions towards the major blockchain. Weekly flows showing $16.9m outflows from Ethereum. CoinShares. Alternate layer 1 blockchains have been growing in popularity recently, decentralized application (dApp) usage on Solana in the last 7 days has increased according to metrics from DappRadar. Usage for the decentralized exchange Orca has grown nearly 43% over the week, and automated market maker Raydium has seen a 15.5% increase, with volume in its app reaching over $1.5 billion.

Whilst the metrics for Avalanche’s dApp usage haven’t increased over the week, the blockchains' investments in incentive programs and millions spent luring developers to the platform have traders bullish on the future of AVAX.

The Avalanche, Solana, Terra and Algorand inflows were $1.8 million, $800,000, $700,000 and $200,000 respectively, whilst Bitcoin saw inflows equating $2.6 million for the first time in two weeks with the analysts noting that month-to-date outflows for the largest crypto remain at $178 million. Total outflows over the past three weeks have seen $219 million leave the market, with that number cooling last week winding down to just 7.2 million, a stark contrast to the $134 million which left the market in the first week of April. Despite the recent run of outflows, the analysts note that year-to-date flows remain positive with $389 million coming into crypto assets since the start of the year.