Bitcoin plunged 28%. Institutional investors bought the dip

The crypto markets appear calm heading into the weekend after a volatile week that tested how institutional investors new to the crypto trade would react to the mammoth swings that are old hat for more seasoned digital currency investors.

The sell-off in bitcoin and ether began earlier this week and wiped out $367 billion in value just as markets in Japan were nosediving. But it turns out, these newbie crypto traders were down to buy the dip.

Spot ether exchange-traded funds collectively saw net inflows of around $120 million this week, with most traders buying in on Monday and Tuesday when the world’s second-largest cryptocurrency was down 42% from its March price high of more than $4,000.

Though net flows for the spot bitcoin ETFs are negative since Monday, data from crypto analytics firm CoinGlass shows demand began to reaccelerate midweek, with the batch of spot funds adding more than $245 million on Wednesday and Thursday.

Hundreds of millions of dollars began flowing into the spot bitcoin ETFs on the same day Morgan Stanley gave the green light to its 15,000 financial advisors to start pitching clients with a net worth north of $1.5 million on the funds issued by BlackRock and Fidelity.

The bank, which is one of the world’s largest wealth management firms, is the first among the big players on Wall Street to take this step. Up to this point, wealth management businesses have only facilitated trades if customers specifically requested exposure to these new spot crypto funds.

Of Morgan Stanley’s $1.5 trillion in assets under management, the bank disclosed in a May 13F filing that it held around $270 million in spot bitcoin ETFs. The next filing deadline on Wednesday will offer the latest read on how much exposure banks and hedge funds now have to these spot crypto products.

The expectation is that other wirehouses and asset managers, who have been on the sidelines performing in-house due diligence on spot crypto ETFs, might feel the pressure to soon follow Morgan Stanley’s lead.

The spot ether ETFs, which launched less than three weeks ago, have seen relatively tepid flows compared to the blockbuster launch of spot bitcoin ETFs in January. The bitcoin funds collectively hold $54.30 billion in assets under management, versus $7.25 billion across the spot ether funds.

More than $100 million in short bets on bitcoin was liquidated in the past 24 hours, helping to support bitcoin’s gains.

Though bitcoin and ether are considerably higher than the intraday lows of Monday, both assets are still down over the past seven days, with ether on pace for its worst week in nearly…