If the amount of money flowing into digital asset funds is any indication, a new period of crypto mania is in full swing.
A report from European asset manager CoinShares on Tuesday said that assets under management for crypto investment vehicles had hit a new all-time high of USD 138 billion. The previous high-water mark was reached last week when crypto traders and institutional investors poured USD 2.2 billion into crypto funds.
CoinShares maintains a global crypto fund tracker focused on instruments that give investors indirect exposure to digital coins and tokens like Bitcoin, Ethereum, and Solana, particularly spot exchange-traded funds (ETFs).
'The sudden surge in inflows looks to be sparked by a blend of loosening monetary policy and Donald Trump’s resounding victory in the recent US presidential election,’ CoinShares’ report said.
The firm's analysts wrote that most of the money found its way into US-listed spot ETFs, giving both sophisticated and retail investors exposure to cryptocurrency price movements.
America’s chief financial watchdog, the Securities and Exchange Commission (SEC), gave the green light to 11 new spot Bitcoin ETFs in January 2024. Managed by financial giants like BlackRock, Fidelity, and Grayscale, the funds give a broad range of investors the ability to invest in cryptocurrencies in a straightforward and regulated manner.
After Trump’s White House win and the Republican sweep of both houses of Congress on 5th November, earlier this month, the price of Bitcoin has skyrocketed to above USD 93,000, driven in part by enthusiasm for crypto ETFs.
Investor interest comes in waves
It's not the first time this year investors have rapidly rushed into crypto ETFs. In August, Bitcoin exchange-traded funds (ETFs) saw inflows of USD 1.35 billion, chalking up the fifth-best week of the year for BTC-devoted funds.
Data from CoinShares showed that close to USD 1.44 billion in assets found their way into exchange traded crypto funds generally, bringing this year’s total to an all-time high of USD 17.8 billion, well in excess of 2021’s previous figure of USD 10.5 billion.
Bitcoin pulled in the lion’s share, which is not surprising. Neither is the fact that USD 1.3 billion of the total came from American investors. The rise has been steady, with August’s inflows tripling the USD 441 million mark achieved just two weeks before. That was when crypto fund inflows turned positive again after three weeks of losses.
An analysis from Farside Investors echoed the CoinShares finding, showing that US spot Bitcoin ETFs saw a full week of daily inflows, posting more than USD 310 million in net inflows on Friday, July 12th, 2024 alone. That was the highest level seen in over a month.
CoinShares’ numbers also had Ethereum racking up positive inflows of around USD 72 million as crypto traders prepare for the expected approval of spot Ethereum ETFs. Altcoins like Solana, Avalanche benefitted from bullish sentiment, with Solana-based funds attracting close to USD 4.3 million in inflows.
In a commentary accompanying the data release, CoinShares said price weakness caused by the German government’s Bitcoin liquidation in late July, along with "changing sentiment thanks to lower than anticipated inflation readings in the US had spurred investors to extend their crypto positions.”