2 billion flows into crypto investments amidst market downturn
Investor excitement for investment products related to cryptocurrency experienced a significant uptick last week despite a general market downturn. According to the most recent report from CoinShares, these financial tools saw net inflows of $2 billion, matching the total inflows for May in its entirety. This marks the fifth consecutive week of positive inflows, with assets totaling around $4.3 billion in investments during this time.
Surprisingly, this is the second-longest streak of inflows since the approval of spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) in January. Alongside the increased inflows, trading activity for these investment products also saw a surge following several weeks of lackluster performance.
James Butterfill, CoinShares’ head of research, mentioned, “Unusually, inflows were seen across almost all providers, with a continued slowdown in outflows from incumbents. Positive price action led to total assets under management (AuM) surpassing the $100 billion mark for the first time since March.”
Bitcoin remained the primary focus for investors, attracting $1.9 billion in inflows, while short BTC products experienced outflows for the third week in a row. Ethereum also witnessed a resurgence, with $69 million in inflows, marking its best week since March. Butterfill suggested that the influx of ETH purchases may have been in response to the SEC’s decision to allow spot ether ETFs.
Looking ahead, some traders anticipate continued inflows into ETH products in the upcoming months, with a potential rally expected towards the end of the year. Other altcoins had minimal activity, with Fantom and XRP standing out with inflows of $1.4 million and $1.2 million, respectively.
The current surge in digital asset investments is likely a reaction to weaker-than-expected macroeconomic data in the U.S., prompting a shift in expectations towards earlier monetary policy rate cuts. This positive momentum has slowed outflows from incumbents and propelled BlackRock’s iShares Bitcoin Trust ahead of Grayscale, now holding an Assets under Management (AuM) value of $21 billion.
Overall, the increase in crypto investments amidst a market downturn reflects a calculated move by investors aiming to seize opportunities arising from favorable economic conditions and regulatory advancements in the cryptocurrency sector. Note that the content on this site should not be taken as investment advice, as investing carries risks and is speculative.