Last week, there was a surge in investor interest in crypto-related investment products despite a general market downturn. According to the latest report from CoinShares, these financial instruments received net inflows of $2 billion, matching the total inflows for the entire month of May. This marks the fifth consecutive week of positive inflows, with assets accumulating around $4.3 billion during this period.
This recent trend is the second-longest streak of inflows since the SEC approved spot Bitcoin exchange-traded funds in January. Along with increased inflows, trading activity for these investment products also saw a surge after several weeks of subdued performance. Trading volumes for Exchange-Traded Products (ETPs) spiked by 55% from the previous week to $12.8 billion, a significant increase from $8 billion the week before.
James Butterfill, the head of research at CoinShares, mentioned, “Unusually, inflows were seen across almost all providers, with a continued slowdown in outflows from incumbents. Positive price action saw total assets under management (AuM) rise above the $100 billion mark for the first time since March this year.”
Bitcoin remained the top choice for investors, attracting $1.9 billion in inflows. On the other hand, short BTC products experienced outflows for the third consecutive week, totaling $5.3 million. Ethereum also experienced a resurgence with $69 million in inflows, marking its best week since March. This brought ETH’s year-to-date flows to $81 million, bouncing back from losses before the SEC approved spot Ethereum ETF 19b-4 filings.
Butterfill noted that the surge in ETH buying was likely a reaction to the SEC’s decision to allow spot ether ETFs. Additionally, traders anticipate continued inflows into ETH products in the coming months, with a rally expected by the year’s end. While other altcoins saw minimal activity, Fantom and XRP stood out with inflows of $1.4 million and $1.2 million, respectively, indicating growing investor interest in a wider range of cryptocurrencies beyond the major players.
The recent surge in digital asset investments is believed to be a response to weak macroeconomic data in the U.S., which has shifted expectations towards earlier monetary policy rate cuts. This optimism has slowed outflows from incumbents and has led to a majority of inflows in the U.S. last week, totaling $1.98 billion. This financial movement has propelled BlackRock’s iShares Bitcoin Trust ahead of Grayscale, now with an Assets under Management (AuM) value of $21 billion.
As the total AuM for digital assets surpasses the $100 billion mark, a peak not seen since March, the surge in crypto investments amidst a market downturn reflects a strategic shift by investors aiming to capitalize on favorable economic conditions and regulatory developments in the cryptocurrency space.
