Institutional capital continues to move into digital assets, with weekly inflows into crypto investment products reaching $882 million in the first week of May 2025, according to new data from CoinShares.
This marks the fourth consecutive week of net positive flows, reflecting rising investor interest in crypto as a hedge against macroeconomic volatility, including inflationary pressures and systemic financial risk.
Bitcoin led the surge with $867 million in inflows, significantly outpacing all other assets. Altcoins like Sui attracted notable attention with $11.7 million, overtaking Solana both for the week and year-to-date (YTD). Ethereum, despite recent price recovery, saw only marginal demand, with just $1.5 million in inflows.
The sustained inflows highlight how macroeconomic factors are reshaping investment behavior. Analysts point to a confluence of trends: the global expansion of M2 money supply, increasing stagflation risks in developed markets, and state-level experimentation with Bitcoin as a strategic reserve asset. These factors are prompting investors - especially institutional players - to reassess crypto’s role within diversified portfolios.
James Butterfill, Head of Research at CoinShares, emphasized that broader monetary conditions are now directly influencing crypto markets: “We believe the sharp increase in both prices and inflows is driven by a combination of factors: a global rise in M2 money supply, stagflationary risks in the US, and several US states approving Bitcoin as a strategic reserve asset.”
Breakdown of Flows: Bitcoin Dominance and Altcoin Divergence
Of the $882 million in total inflows, Bitcoin captured the overwhelming majority. The digital asset now sits at the center of institutional exposure, bolstered by January’s launch of spot Bitcoin ETFs in the United States. Cumulative net inflows into these ETFs have surpassed $62.9 billion, exceeding the previous record of $61.6 billion.
While Ethereum has appreciated in price amid a general market uptrend, investor sentiment remains subdued, particularly in comparison to Bitcoin. This may reflect ongoing uncertainty about Ethereum’s regulatory status, the delayed impact of planned ETF approvals, and the slower uptake of Ethereum-based institutional products.
Among altcoins, Sui emerged as a top performer. Its $11.7 million in inflows last week pushed its YTD total to $84 million, surpassing Solana’s $76 million. Solana, by contrast, saw $3.4 million in outflows, signaling shifting preferences among risk-on institutional investors.
Institutional Positioning in Response to Monetary Expansion
A key macroeconomic driver behind this investment activity is the continued expansion of M2 money supply, especially in major economies like the United States and China. China’s M2 supply remains at an all-time high of ¥326.13 trillion (approximately $45 trillion), reflecting ongoing efforts to stimulate domestic liquidity. Similar expansionary trends have been observed in the eurozone and other G20 economies.
Historically, surges in M2 have been associated with greater investor appetite for risk assets, including equities, commodities, and more recently, cryptocurrencies. Bitcoin’s price correlation with global M2 levels has gained increasing attention among analysts. While the relationship is complex, the perception of Bitcoin as a beneficiary of global liquidity cycles is gaining institutional traction.
This interpretation is not without skeptics. Some macro strategists argue that the link between M2 and Bitcoin is overstated, pointing instead to speculative momentum and ETF-driven demand. Nonetheless, the growing body of correlation data is influencing portfolio construction decisions across hedge funds, family offices, and even traditional asset managers.
Recession Signals and the Repricing of Risk
Another contributing factor is the elevated risk of recession in the United States. Goldman Sachs recently revised its 12-month U.S. recession probability to 45%, citing persistent inflation, slowing consumer demand, and geopolitical headwinds. In parallel, the firm has increased indirect exposure to Bitcoin through various fund allocations that include spot ETF products.
This move is being interpreted by many as a defensive hedge against deteriorating macro conditions and the structural weaknesses in traditional fixed-income markets. With U.S. Treasury yields remaining volatile and federal deficits ballooning, institutional investors are increasingly exploring crypto as a hedge against both currency debasement and bond market instability.
Standard Chartered echoed this sentiment in a recent report, noting that Bitcoin is being positioned as a hedge not only against inflation but also against volatility in the Treasury and credit markets. The report suggested that crypto assets, particularly Bitcoin, are “entering a phase of strategic allocation” rather than being used solely for tactical speculation.
State-Level Bitcoin Reserves: An Emerging Trend
At the policy level, a handful of U.S. states are taking concrete steps to adopt Bitcoin as a strategic reserve asset. States like Arizona and New Hampshire have advanced proposals to integrate Bitcoin into their treasury frameworks. The rationale includes diversification away from fiat-denominated assets, inflation hedging, and political alignment with broader cryptocurrency adoption trends.
However, such initiatives remain controversial. States like Florida have encountered legal and procedural roadblocks, highlighting the uneven policy landscape around public-sector Bitcoin integration. Still, the symbolism of state-level adoption appears to be influencing investor psychology, particularly as the 2024–2025 election cycle places digital asset regulation in the national spotlight.
Although the current inflow narrative is dominated by Bitcoin, the broader crypto ecosystem is also undergoing structural change. Stablecoins are gaining traction as tools for payments, remittances, and short-term treasury management. Platforms like Fireblocks report that over 30% of stablecoin transaction volume now originates from payment companies, not exchanges or trading desks.
This reflects a shift in use cases: from settlement and speculation to utility and cash management. As more institutions explore stablecoin-based solutions, especially in cross-border transactions, the market is diversifying beyond pure price exposure.
That said, stablecoin inflows remain modest compared to Bitcoin, and ongoing regulatory uncertainty - particularly in the EU with MiCA and in the U.S. with yet-to-be-finalized stablecoin bills - continues to constrain the pace of adoption.
Volatility and Rotation in Altcoins
Meanwhile, the altcoin segment remains volatile and fragmented. Sui’s rise comes amid broader rotation within Layer 1 ecosystems, as investors seek exposure to differentiated technical architectures and funding ecosystems. Solana’s recent network outages and bugs may be contributing to outflows, even as it retains strong developer momentum.
Other altcoins, including Avalanche, Polkadot, and Cosmos, have seen mixed flows, reflecting cautious positioning among institutions amid regulatory uncertainty and rapid technological change.
The introduction of spot Bitcoin ETFs in the U.S. has been a structural catalyst. These products have unlocked access for a wide range of institutional investors who were previously constrained by compliance and custody challenges. As a result, market structure is shifting: liquidity is deepening, volatility is compressing, and volume is increasingly flowing through regulated channels.
Yet, the success of Bitcoin ETFs has also raised concerns about centralization and market manipulation, particularly given the concentration of inflows into a handful of issuers. The SEC’s pending decisions on spot Ethereum ETFs and other derivative products will further shape the trajectory of regulated crypto markets.
Final thoughts
The confluence of macro tailwinds, product innovation, and regulatory developments is driving a renewed cycle of crypto adoption. But this cycle is materially different from previous ones. Institutions are no longer sidelined; they are actively allocating and rebalancing in response to real-world economic conditions.
However, risks remain. Global regulatory frameworks are still fragmented, and the pace of policy coordination has lagged behind market innovation. If macro conditions worsen, crypto’s correlation with risk assets could resurface, potentially undermining its hedge narrative.
Moreover, the sector’s growing interconnectedness with traditional finance - highlighted in recent BIS reports - means that crypto is no longer isolated from systemic risks. As such, the next phase of growth will likely be accompanied by heightened scrutiny, both from policymakers and from investors.
The $882 million in weekly crypto inflows signal a broader institutional recalibration. Bitcoin is increasingly viewed through a macro lens, not merely as a digital commodity but as a tool for navigating inflation, liquidity cycles, and fiscal instability. Altcoins continue to jockey for relevance, with rotation driven by both technological developments and risk sentiment.
As global monetary dynamics continue to evolve, digital assets are carving out a new role - not as an alternative to the financial system, but as a growing extension of it.