2 Billion Flows into Crypto Investments Despite Market Downturn
Last week, investor excitement for crypto-related investment products surged despite a general market decline. CoinShares’ most recent report revealed that these financial instruments attracted $2 billion in net inflows, 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.
Notably, 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 increased inflows, trading activity for these investment products also spiked after weeks of subdued performance.
James Butterfill, CoinShares’ head of research, highlighted the rise in trading volume for Exchange-Traded Products (ETPs), which increased by 55% from the previous week to $12.8 billion, a significant jump from $8 billion.
Bitcoin remained a key focus for investors, attracting $1.9 billion in inflows, while short BTC products experienced outflows for the third consecutive week. Ethereum also saw a resurgence with $69 million in inflows, its best week since March. This surge in ETH buying was likely in response to the SEC’s decision to allow spot ether ETFs.
Despite minimal activity in other altcoins, Fantom and XRP stood out, recording inflows of $1.4 million and $1.2 million, respectively. This trend suggests a growing interest among investors in a wider range of cryptocurrencies beyond the major ones.
The recent surge in digital asset investments is believed to be a reaction to weak macroeconomic data in the U.S., prompting expectations of earlier monetary policy rate cuts. This optimism has slowed outflows from incumbents and propelled BlackRock’s iShares Bitcoin Trust ahead of Grayscale, with an Assets under Management (AuM) value of $21 billion.
Overall, the increase in crypto investments amidst a market downturn reflects a strategic shift by investors looking to capitalize on favorable economic conditions and regulatory developments in the cryptocurrency sector.
