Last week, there was a significant increase in capital into digital asset investment products, totaling $346 million, according to the latest data from CoinShares.
This amount represents the largest weekly inflow in a consecutive nine-week period and is reminiscent of the enthusiasm seen during the bull market of late 2021. The spike in inflows has pushed the total assets under management (AuM) to $45.3 billion, the highest in over eighteen months.
Canada and Germany contributed 87% of the total inflows, with $199.1 million and $101.5 million, respectively. In contrast, the United States saw a more modest $30 million, possibly due to investors anticipating a spot-based Exchange-Traded Fund (ETF) launch in the US.
Despite this, the US still has significantly more assets under management, with $33.1 billion, over ten times more than the next highest country.
Bitcoin and Ethereum Lead the Charge
Last week, Bitcoin saw inflows of $311.5 million, bringing year-to-date inflows to over $1.5 billion. This strong accumulation coincides with a decrease in short sellers, as evidenced by the third consecutive week of outflows of $900,000 from short-Bitcoin ETPs.
Ethereum also saw inflows of $33.5 million, contributing to a four-week total of $103 million. This trend nearly offsets the year’s previous outflows and indicates a significant shift in investor sentiment for the second-largest digital asset by market capitalization.
Implications for the Crypto Market
The influx of capital into other cryptocurrencies such as Solana, Polkadot, and Chainlink, although smaller in comparison, indicates a diversified investment interest within the sector. The continued use of Exchange-Traded Products (ETPs) also underscores a growing preference for regulated financial instruments to gain exposure to the crypto market, with ETPs accounting for 18% of total spot Bitcoin volumes last week.
This financial movement aligns with the anticipation of a US-based spot ETF. The increase in AuM and consistent inflows into both primary and alternative digital assets suggest a more optimistic market, or at least a bet on the potential of a more regulated and accessible cryptocurrency investment landscape.
Butterfill has stated that there has been “a decisive turn-around in sentiment,” and the data appears to represent an industry at an inflection point, with investor sentiment and market dynamics aligning in a way that could define the trajectory of the crypto market for the foreseeable future.
For the full CoinShares weekly report, visit James Butterfill’s Medium blog.