Digital Asset Investment Products See Record Inflows of US$2.45 Billion

The digital asset market is booming, as investors flock to various crypto-related products amid rising prices and growing adoption. According to the latest report by CoinShares, a leading digital asset investment firm, digital asset investment products saw record weekly inflows of US$2.45 billion, bringing the total inflows for the year to date to US$5.2 billion.

The report, titled “Digital Asset Fund Flows Weekly”, tracks the flows and performance of various digital asset investment products, such as exchange-traded funds (ETFs), exchange-traded notes (ETNs), and closed-end funds. The report covers the week ending on February 16, 2024, and shows that the total assets under management (AuM) of these products have reached US$67 billion, the highest level since December 2021, when the market peaked at US$69 billion.

Source: CoinShares

The report also reveals that the United States dominated the inflows, accounting for 99% of the total, or US$2.4 billion. This reflects the increasing demand for spot-based ETFs, which allow investors to gain exposure to the underlying assets without having to deal with custody or security issues. Several spot-based ETFs have been launched in the US in recent months, such as the Valkyrie Bitcoin Trust, the Bitwise Crypto Industry Innovators ETF, and the VanEck Digital Transformation ETF.

Other regions, such as Germany and Switzerland, saw modest inflows of US$13 million and US$1 million respectively, while Sweden saw outflows of US$26 million. The report attributes the outflows from Sweden to the expiration of some ETNs, which are debt instruments that track the performance of an underlying asset.

Among the different digital assets, Bitcoin was the clear winner, attracting over 99% of the inflows, or US$2.43 billion. Some investors also took the opportunity to add to short-bitcoin positions, which saw US$5.8 million inflows. Ethereum, the second-largest digital asset by market capitalization, also saw inflows of US$21 million, while Solana, a fast-growing blockchain platform, saw outflows of US$1.6 million, following a recent network outage that affected its operations.

Source: CoinShares

Other digital assets that saw inflows include Avalanche, Chainlink, and Polygon, which received US$1 million, US$0.9 million, and US$0.9 million respectively. These assets have been gaining popularity for their innovative features, such as scalability, interoperability, and smart contract functionality.

On the other hand, investors in blockchain equity ETFs decided to take profits last week, seeing outflows of US$167 million. These ETFs invest in companies that are involved in the blockchain industry, such as miners, exchanges, software developers, and hardware manufacturers. The report suggests that the outflows may be due to the high valuations of some of these companies, as well as the regulatory uncertainty surrounding the sector.

The report concludes that the digital asset market is showing strong momentum, as more investors seek to diversify their portfolios and gain exposure to the emerging technology. The report also expects more product launches and innovation in the space, as well as increased institutional adoption and regulatory clarity.

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