Thursday, February 22, 2024

Largest Weekly Inflows in Digital Assets in Over a Year, Led by Bitcoin

In a significant shift of sentiment, digital asset investment products experienced their largest single weekly inflows since July 2022, totaling a substantial $199 million, according to CoinShares report. This surge effectively corrected almost half of the prior nine consecutive weeks of outflows, signaling renewed investor confidence in the market.

Bitcoin emerged as the primary beneficiary, capturing a staggering $187 million in inflows last week, which accounted for an impressive 94% of the total funds. This surge in Bitcoin investment comes amidst one of the largest price surges in recent times, as the cryptocurrency experienced a remarkable 20% increase over the course of the week.

Conversely, short-bitcoin products continued to face outflows for the ninth consecutive week, with a total of $4.9 million withdrawn.

However, this positive sentiment did not extend to altcoins, as they only witnessed minor inflows. Ethereum, the second-largest cryptocurrency by market capitalization, attracted $7.8 million in inflows. Although this figure represented a mere 0.1% of assets under management (AuM) compared to Bitcoin’s 0.7% inflows, it indicated a relatively lower appetite for Ethereum in the current market.

The positive market shift was primarily attributed to recent announcements made by high-profile exchange-traded product (ETP) issuers. These issuers have filed applications for physically backed exchange-traded funds (ETFs) with the US Securities and Exchange Commission, generating renewed optimism among investors.

The total assets under management (AuM) for digital asset investment products now stand at an impressive $37 billion, reaching their highest point since before the collapse of 3 Arrows Capital.

While Bitcoin experienced significant inflows, outflows persisted for short-bitcoin products. Over the course of the past nine weeks, outflows accounted for 60% of the total AuM, further highlighting the divergence in investor sentiment.

Other altcoins, including XRP and Solana, saw only marginal inflows of $0.24 million and $0.17 million, respectively. However, the improved market sentiment did encourage some investors to explore multi-asset investment ETPs, resulting in $8 million in inflows during the previous week.

Overall, the surge in inflows into digital asset investment products, particularly Bitcoin, suggests a growing confidence among investors, possibly driven by the anticipation of new physically backed ETFs in the US market. While altcoins have yet to witness a substantial boost, the market remains dynamic, and investor preferences may shift as new opportunities emerge.

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