The cryptocurrency market witnessed a significant influx of investments last week as notable factors played a key role in changing investor sentiment.
According to the latter report from CoinShares, digital asset investment products globally saw net inflows of $407 million, marking a sharp recovery after a week of outflows in the previous week. This strong increase in inflows is mainly attributed to a interesting trend In the United States.
Bitcoin leads in fund inflows while Ethereum sees continued outflows
Bitcoin investment products were the main leader in last week’s fund flow, attracting $419 million in net inflows, according to data from CoinShares.
Interestingly, short Bitcoin investment products designed to profit from Bitcoin’s price declines saw outflows of $6.3 million, reflecting a growing bullish sentiment around cryptocurrency.
US Bitcoin Exchange-Traded Funds (ETFs) also saw $348.5 million in net inflows last week, despite brief outflows Tuesday through Thursday.
The week ended strongly with more than $200 million in positive flows on Monday and Friday, signaling renewed investor confidence in the digital asset market.
While Bitcoin-related products saw significant inflows, Ethereum-based funds continued to face challenges. CoinShares’ report found that Ethereum investment products saw net outflows of $9.8 million globally, despite small inflows of $1.9 million into US Ethereum ETFs.
This marks a continuation of the negative trend that Ethereum has faced in recent weeks, indicating continued concerns among investors about the asset’s short-term prospects.
Other multi-asset investment products, including exposure to various cryptocurrencies, continued on a positive trajectory. These products recorded their 17th consecutive week of inflows, adding a modest $1.5 million to their total.
Furthermore, blockchain equity ETFs saw a notable increase, bringing in inflows of $34 million, making this one of the largest weekly increases of the year. Butterfill attributed this increase to Bitcoin’s recent price increases, which further strengthened the connection between the two countries Bitcoin’s performance and the overall health of the crypto market.
What caused the $407 million inflow?
James Butterfill, head of research at CoinShares, highlighted the impact of US political developments on the inflow trend.
“Investor decisions are likely more influenced by the upcoming US election than by the outlook for monetary policy,” Butterfill explains, pointing to the Republican Party’s growing support for digital assets as a driving factor.
The CoinShared Head of Research further pointed out that this shift was evident after the recent one American vice presidential debate and polls showed Republican support increasing, leading to an “instant surge” in cryptocurrency inflows and prices.
In terms of regional fund flows, it is no surprise that US-based funds dominated inflows, contributing $406 million to the total inflows of $407 million recorded last week.
Apart from the US, the only other significant contribution to the positive inflows came from Canadian crypto funds, which saw net inflows of $4.8 million. In contrast, funds from other regions showed small outflows.
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