The cryptocurrency market has been buzzing with activity, especially over the last week. A remarkable influx of investments has been observed, driven by several key factors that have significantly influenced investor sentiment.
According to a comprehensive report by CoinShares, digital asset investment products received an impressive $407 million in net inflows globally. This marks a sharp turnaround after a previous week characterized by outflows. The increase in inflows has been primarily linked to intriguing trends emerging from the United States.
Bitcoin Dominates Fund Inflows, While Ethereum Continues to Face Challenges
Bitcoin investment products emerged as the frontrunners in last week’s fund flow, attracting a substantial $419 million in net inflows, as reported by CoinShares. Interestingly, products that short Bitcoin, designed to benefit from declines in Bitcoin’s price, experienced $6.3 million in outflows. This indicates a growing bullish sentiment surrounding the cryptocurrency.
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US spot Bitcoin exchange-traded funds (ETFs) also played a significant role, contributing $348.5 million in net inflows last week, despite witnessing temporary outflows from Tuesday to Thursday. The week concluded on a strong note, with over $200 million in positive flows recorded on both Monday and Friday, reflecting renewed investor confidence in the digital asset market.
While Bitcoin-related products enjoyed substantial inflows, Ethereum-based funds continued to grapple with challenges. CoinShares’ report highlighted that Ethereum investment products faced net outflows of $9.8 million globally, despite a modest $1.9 million inflow into US spot Ethereum ETFs. This trend underlines persistent concerns among investors regarding Ethereum’s near-term outlook.
Multi-asset investment products, which provide exposure to various cryptocurrencies, maintained a positive trajectory. These products recorded their 17th consecutive week of inflows, adding a modest $1.5 million to their total.
Additionally, blockchain equity ETFs saw a notable surge, attracting $34 million in inflows, marking one of the largest weekly increases of the year. James Butterfill, CoinShares’ Head of Research, attributed this rise to recent gains in Bitcoin’s price, further cementing the connection between Bitcoin’s performance and the overall health of the crypto market.
Factors Behind the $407 Million Inflow Surge
James Butterfill shed light on the impact of US political developments on the inflow trend. He noted that investor decisions have been more heavily influenced by the upcoming US elections than by monetary policy outlooks. Butterfill highlighted the growing support for digital assets from the Republican Party as a key driving factor.
The shift became evident after the recent US vice-presidential debate and polling data that revealed increased Republican support. This led to an “immediate boost” in inflows and cryptocurrency prices.
In terms of regional fund flows, it comes as no surprise that US-based funds dominated the inflows, contributing $406 million to the total $407 million recorded last week. Aside from the US, the only other notable contributor to the positive inflows came from Canadian crypto funds, which saw net inflows of $4.8 million. In contrast, funds based in other regions recorded minor outflows.
