Coinbase: Smart Money Flows To Crypto Sectors

A recent report from Coinbase’s research unit details the shifting focus of “smart money” – encompassing investment funds, market makers, and venture capital firms – within the cryptocurrency market. The report highlights a redirection of investment following the October 10th market downturn.

Smart money has increasingly gravitated towards Ethereum, Arbitrum, and Base networks, alongside yield-generating DeFi projects and real-world asset (RWA) initiatives. Solana and Binance Smart Chain (BSC) are exhibiting decelerated momentum, while Ethereum and Arbitrum currently lead in net smart money inflows.

This trend has strengthened over the past 30 days. Coinbase attributes Arbitrum’s renewed activity to the reactivation of incentive and DAO programs in October. The Base network has seen a surge in activity driven by the rapid growth of the x402 ecosystem and Farcaster’s acquisition of the Clanker launchpad.

The report indicates a sectoral rotation since October 10th, favoring projects focused on utility and yield over speculative ventures. Yield-generating protocols are leading smart money inflows after recovering from post-crash price distortions, now reaching double-digit percentages.

Real-world asset (RWA) tokenization is another area attracting significant investment. The report notes that in October, BlackRock’s BUIDL fund invested approximately $500 million each into Polygon, Avalanche, and Aptos networks.

According to Coinbase, these capital flows represent a reallocation of existing liquidity rather than entirely new injections of funds.

The study provides insight into the evolving priorities of sophisticated investors within the crypto space.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.