This year has seen a major increase in inflows into crypto investment products, with an annual record of $29.2 billion, as shown in a recent report. report from CoinShares.
Last week alone, weekly net inflows amounted to $2.18 billion, driven by various market factors and significantly influenced by the political environment in the United States.
Bitcoin leads in inflows, US funds dominate the market
The CoinShares report highlighted that the substantial inflows, combined with price increases in major cryptocurrencies in recent months, have increased total assets under management in recent months. crypto funds above the $100 billion mark.
This is only the second time crypto funds have reached this level, last seen in June with a peak of $102 billion. Weekly trading volumes also rose 67% to $19.2 billion, representing about 35% of Bitcoin’s trading volume on the major exchanges.
The report found a clear preference for Bitcoin among investors, with Bitcoin-related investment products accounting for $2.16 billion of the total global weekly net inflows.
US-based funds mainly contributed to last week’s net inflows, adding $2.23 billion. Other regions, such as Canada, Germany and Switzerland, saw slight outflows: Canadian funds recorded $24.4 million, German funds $20.3 million and Swiss funds $13.8 million. net weekly outflow.
In addition to standard Bitcoin investment products, the report indicated that short Bitcoin products saw inflows of $8.9 million, indicating that some investors are hedging against potential downside risks in Bitcoin’s performance.
Besides Bitcoin, other assets such as Ethereum also saw inflows, albeit in significantly lower volume. Ethereum-based investment products recorded net inflows of $9.5 million this week, but the report highlighted that overall sentiment around Ethereum remains less bullish than that of Bitcoin and Solana.
Investor sentiment and market trends determine inflows
The analysis from CoinShares Head of Research, James Butterfill, highlights the effect of current political developments in the US on crypto investment behavior, especially Bitcoin.
He pointed out that the substantial inflows seen early this week were likely driven by optimism about potential regulatory and economic changes under a Republican-led administration, reflecting the strong interplay between market sentiment and political predictions.
However, the slight outflow at the end of the week also underlines the market’s sensitivity to shifts in polling data, which could impact future inflows if uncertainties persist.
The CoinShares report also illustrated how this year’s cryptocurrency influx and price surge have collectively positioned 2024 as a pivotal year for crypto investment products.
By comparison, annual inflows have tripled the previous record of $10.5 billion set in 2021, demonstrating growing institutional acceptance and participation in the reform. crypto market.
With these trends in mind, the report suggests that the digital asset investment space remains strong, albeit influenced by a complex mix of factors ranging from traditional financial factors to evolving political conditions.
Featured image created with DALL-E, Chart from TradingView