Investors are moving cash back toward cryptocurrency funds, signaling a potential market bottom

• Investors are feeling confident that bitcoin may have bottomed out after five months of steep losses.
• Cash inflows to cryptocurrency funds turned green in May, according to CryptoCompare.

Investors are starting to show renewed signs of confidence in cryptocurrencies, signaling the crypto market may have hit a bottom.

Cryptocurrency funds saw weekly average inflows of $66.5 million in May, compared to a weekly average outflows of $49.6 million in April, according to CryptoCompare data cited by Reuters.

And Kraken Intelligence has found that the assets under management of some cryptocurrency exchange-traded funds have climbed over the past seven days, with the popular ProShares bitcoin ETF rising 6%.

Meanwhile, global bitcoin holdings in exchange-traded products hit an all-time high of 205,008 bitcoin in early June, Norway-based crypto research firm Arcane Research told Reuters.

"It's largely institutional, and to a degree retail investors, recognizing that the pain is already endured, and we're closer to the bottom than we are to the top," Ben McMillan, chief investment officer of Arizona-based IDX Digital Assets, told Reuters.

The latest influx of cash comes as bitcoin, the largest cryptocurrency by market capitalization, is down 38% from the start of 2022. Bitcoin has struggled to find support above $30,000, which is more than half of its all-time high of $69,000 reached in November 2021. Bitcoin was trading lower Tuesday, down nearly 6%.

Cryptos have reacted negatively to tightening from the Federal Reserve and Russia's invasion of Ukraine, mostly in line with traditional markets experiencing turbulence.