Investor enthusiasm for crypto-related investment products saw a notable increase last week amid a broader market downturn. According to CoinShares‘ latest report, these financial instruments experienced net inflows of $2 billion, mirroring the total inflows for the entire month of May. This marks the fifth consecutive week of positive inflows, with assets accumulating approximately $4.3 billion in investments during this period.
Trading activity and volume surge
In addition to increased inflows, trading activity for these investment products also surged following several weeks of subdued performance. This surge aligns with a notable increase in Exchange-Traded Products (ETPs) trading volumes, which spiked by 55% from the previous week, reaching $12.8 billion, a significant jump from the previous week’s $8 billion.
James Butterfill, CoinShares’ head of research, noted: “Unusually, inflows were seen across almost all providers, with a continued slowdown in outflows from incumbents. Positive price action saw total assets under management (AuM) rise above the $100 billion mark for the first time since March this year.”
Bitcoin (BTC) remained the primary focus for investors, attracting $1.9 billion in inflows. Conversely, short BTC products experienced outflows for the third week in a row, totaling $5.3 million. Ethereum (ETH) also witnessed a resurgence, with $69 million in inflows, marking its best week since March. This pushed ETH’s year-to-date flows to $81 million, recovering from earlier losses before the SEC approved several spot Ethereum ETF 19b-4 filings.
Butterfill added that ETH buying was likely in reaction to the surprise SEC decision to allow spot Ethereum ETFs. Meanwhile, some traders expect the inflows into ETH products to continue in the coming months, with a rally expected toward the end of the year. Other notable altcoins had minimal activity, with inflows remaining below $1 million. However, Fantom (FTM) and XRP stood out, recording inflows of $1.4 million and $1.2 million, respectively. This trend indicates a growing interest among investors in a broader range of cryptocurrencies beyond the major players.
Impact of macroeconomic data and future outlook
The current surge in digital asset investments is likely a response to the unexpectedly weak macroeconomic data in the U.S., which has shifted expectations toward earlier monetary policy rate cuts. This optimism is evident across nearly all digital asset providers and has significantly slowed outflows from incumbents. Regionally, the U.S. saw the majority of inflows totaling $1.98 billion last week, with the first day of the week seeing the third-largest daily inflow on record. This financial movement has propelled BlackRock’s (NYSE: BLK) iShares Bitcoin Trust ahead of the long-time leader Grayscale, now boasting an Assets under Management (AuM) value of $21 billion.
This milestone coincides with the total AuM for digital assets surpassing the $100 billion mark, a peak not seen since March. Overall, the surge in crypto investments amid a market downturn reflects a strategic shift by investors seeking to capitalize on favorable economic conditions and regulatory developments in the cryptocurrency space.
