Cryptocurrency markets saw significant investment inflows last week as notable factors played a key role in changing investor sentiment.
According to CoinShares' latest report, digital asset investment products recorded net inflows of $407 million worldwide, marking a sharp recovery from the previous week's outflows. This surge in inflows is primarily due to an interesting trend in the United States.
While Ethereum continues to experience outflows, Bitcoin leads in terms of inflows.
Bitcoin investment products were the major leader in capital flows last week, attracting $419 million in net inflows, according to CoinShares data.
Interestingly, Bitcoin short investment products designed to profit from falling Bitcoin prices saw outflows of $6.3 million, reflecting growing bullish sentiment towards the cryptocurrency.
The U.S. Spot Bitcoin exchange-traded fund (ETF) also recorded net inflows of $348.5 million last week, although there were temporary outflows from Tuesday to Thursday.
The week ended strongly with positive flows of over $200 million on Monday and Friday, demonstrating renewed investor confidence in the digital asset market.
While Bitcoin-related products saw significant inflows, Ethereum-based funds continued to face challenges. The CoinShares report revealed that despite small inflows of $1.9 million to the US Spot Ethereum ETF, there were net outflows of $9.8 million from Ethereum investment products worldwide.
This marks a continuation of the negative trend that Ethereum has been struggling with in recent weeks and shows that investors remain concerned about the asset's near-term prospects.
Other multi-asset investment products, including exposure to various cryptocurrencies, also maintained their strong trajectory. These products had 17 consecutive weeks of inflows, adding just $1.5 million to the total.
Additionally, blockchain equity ETFs saw a notable spike, with $34 million in inflows, one of the largest weekly gains this year. Butterfill believes this increase is due to the recent rise in Bitcoin prices, further solidifying the relationship between Bitcoin's performance and the overall health of the crypto market.
What caused the $407 million inflow surge?
James Butterfill, head of research at CoinShares, highlighted the impact of the US political situation on inflow trends.
“Investor decisions are likely to be influenced more by the upcoming US election than by the outlook for monetary policy,” Butterfill explained, adding that growing Republican support for digital assets is the driving force. He pointed out that
CoinShared's head of research further added that the move comes after recent US vice presidential debates and polling data showed an increase in support for the Republican Party, which led to capital inflows and an “immediate uptick” in crypto prices. He pointed out that the changes are obvious.
In terms of regional capital flows, US-based funds unsurprisingly accounted for the majority of inflows, contributing $406 million of the $407 million total inflows recorded last week.
Outside of the US, only Canadian crypto funds contributed significantly to positive inflows, with net inflows of $4.8 million. In contrast, funds based in other regions recorded smaller outflows.
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