Crypto Investment Products Attract US$598m More Inflows, Totaling US$5.7bn This Year

Digital asset investment products, such as exchange-traded funds (ETFs) and exchange-traded notes (ETNs), have seen a surge of inflows in the past four weeks, indicating a growing demand for exposure to the crypto market.

According to the latest Digital Asset Fund Flows Weekly Report by CoinShares, a leading provider of digital asset investment products, the inflows continued with a further US$598m inflows last week, bringing the total year-to-date inflows to US$5.7bn. This amount accounts for 55% of the record inflows of US$10.4bn witnessed in 2021, when the crypto market reached new highs.

The report also revealed that the total assets under management (AuM) of digital asset investment products peaked at US$68.3bn earlier in the week, the highest level since December 2021. However, this is still far from the all-time high of US$87bn achieved in November 2021, before the crypto market experienced a sharp correction.

The US remains the dominant region for digital asset investment products, seeing most of the inflows at US$610m last week. However, this was offset by the incumbent issuer Grayscale, which saw further outflows totalling US$436m last week. Grayscale is the largest digital asset manager in the world, with over US$40bn in AuM, but has been facing increased competition from other issuers, especially in the ETF space.

Other regions saw minor inflows or outflows last week, with Brazil and Switzerland attracting US$8.2m and US$2.1m respectively, while Canada and Sweden saw US$18m and US$8m leave their products respectively.

Among the different digital assets, Bitcoin remained the most popular, seeing US$570m inflows last week, bringing the year-to-date inflows to US$5.6bn. Bitcoin’s price has been on an upward trend since the beginning of the year, reaching over US$50,000 recently. However, some investors have also taken short positions on Bitcoin, as evidenced by the US$3.9m inflows into short-bitcoin products last week.

Ethereum, the second-largest digital asset by market capitalization, saw US$17m inflows last week, while other altcoins, such as Chainlink and XRP, saw inflows of US$1.8m and US$1.1m respectively. Solana, a fast-growing blockchain platform that competes with Ethereum, saw outflows of US$3m last week, likely due to the recent network outage that affected its performance and reputation.

Blockchain equities, which are stocks of companies that are involved in the blockchain and crypto industry, continued to see outflows totalling US$81m last week, suggesting that equity investors are a little cautious at present. Blockchain equities have been underperforming the broader market, as well as the digital asset market, in the past few months.

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