This year saw a significant rise in inflows of cryptocurrency investment products, reaching an annual record of $29.2 billion, a recent study revealed. a report From Queen Shares.
Net weekly flows last week alone amounted to $2.18 billion, driven by various market factors and greatly influenced by the political climate in the United States.
Bitcoin leads inflows, and US funds dominate the market
The CoinShares report highlighted that significant inflows, combined with price increases across major cryptocurrencies in recent months, have pushed the total assets under management in crypto funds past $100 billion.
This is only the second time cryptocurrency funds have reached this level, as it was last seen in June at a peak of $102 billion. Weekly trading volumes also rose by 67% to $19.2 billion, representing about 35% of Bitcoin trading volume on major exchanges.
The report indicated a clear preference for Bitcoin among investors, with Bitcoin-related investment products accounting for $2.16 billion of total global weekly net flows.
US-based funds mainly contributed to net inflows last week, adding $2.23 billion. Other regions, such as Canada, Germany and Switzerland, saw slight outflows, with Canadian funds seeing $24.4 million, German funds $20.3 million, and Swiss funds seeing $13.8 million in weekly net outflows.
In addition to standard Bitcoin investment products, the report noted that short Bitcoin products saw inflows of $8.9 million, suggesting that some investors are hedging against potential downside risks in Bitcoin’s performance.
Aside from Bitcoin, other assets such as Ethereum also saw inflows, albeit on a much smaller volume. Ethereum-based investment products recorded net inflows of $9.5 million over the week, but the report highlighted that overall sentiment around Ethereum remains less optimistic than Bitcoin and Solana.
Investor sentiment and market trends shape inflows
An analysis by CoinShares Head of Research, James Butterville, highlights the impact of current political developments in the United States on investment behavior in cryptocurrencies, especially Bitcoin.
He noted that the country’s large inflows early in the 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 expectations.
However, the slight outflows seen at the end of the week also underscore the market’s sensitivity to shifts in survey data, which could impact future flows if uncertainty persists.
The CoinShares report also explained how this year’s cryptocurrency inflows and rising prices have made 2024 a pivotal year for cryptocurrency investment products.
For comparison, annual flows tripled the previous record of $10.5 billion set in 2021, showing growing institutional acceptance and participation in the cryptocurrency market.
With these trends in mind, the report notes that the digital asset investment space remains strong, although influenced by a complex mix of factors ranging from traditional financial drivers to evolving political conditions.
Featured image created with DALL-E, chart from TradingView