The early birds are betting bitcoin is bottoming out, invest in crypto?

Some investors are now betting that Bitcoin is bottoming out, judging by the money heading into listed cryptocurrency funds, which represent just a slice of the market yet are popular among institutional and retail players alike.

Overall flows into such funds turned positive last month, with a weekly average inflow of $66.5 million, a reversal from a dismal April when they saw a weekly average outflow of $49.6 million, according to data provider CryptoCompare.

"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," said Ben McMillan, chief investment officer of Arizona-based IDX Digital Assets.

"If you're getting into crypto at these levels, a little near-term volatility could be worth a long-term payoff," he added. "A lot of institutional investors are starting to look at crypto as a source of longer-term growth potential." It's hard to know whether the tentative flows will last, though, or if the nascent trend will be replicated across the wider market.

Many people will also think twice before piling into the market again, having been mightily clobbered as crypto was buffeted by worries over global monetary tightening and rising inflation. Bitcoin has lost roughly half its value since a November peak, it is down by a third in 2022 and has been languishing at around $30,000 for a month.

The data from funds nonetheless indicate some investors are returning to crypto, albeit into the perceived safety of exchange-traded products (ETP) with their promise of greater liquidity and security.

The assets under management of several Bitcoin-futures ETFs have risen in the past week, according to Kraken Intelligence.

The assets of the ProShares Bitcoin Strategy ETF's have grown 6%, while those of the Global X Blockchain & Bitcoin Strategy ETF and VanEck Bitcoin Strategy ETF have climbed over 3%.

BY comparison, ProShares' Bitcoin fund saw outflows of over $127 million in April.

The bullish trend has extended into June, with global Bitcoin ETP holdings jumping to an all-time high of 205,008 Bitcoin in the first two days of the month, Norway-based crypto research firm Arcane Research found.

"This is a promising sign for what's to come," said Arcane analyst Vetle Lunde.

In an indication investors are being selective and cautious, only Bitcoin funds have received inflows while funds focused on ethereum and other crypto still experienced outflows.

But let's not forget, while the fortunes of some funds may potentially be turning up, most have posted poor returns this year as the crypto market has tanked.

U.S. digital assets funds have lost 46% on average so far in 2022, posting losses of 22% in May, according to Morningstar.