Cryptocurrency investment products have seen a significant uptick as they record the largest single weekly inflows since July 2022, with $199 million being invested in these products in a correction of the prior nine consecutive weeks of outflows.
According to CoinShares’ Digital Asset Fund Flows report, the flagship cryptocurrency Bitcoin ($BTC) saw the lion’s share of inflows as exchange-traded product (ETP) trading volumes were 170% of the recorded average for this year, totaling $2.5 billion.
he surge in trading activity comes at a time when the total assets under management (AuM) stand at a robust $37 billion, marking their highest level since the unfortunate collapse of Three Arrows Capital. Leading the charge in the latest inflow wave was Bitcoin, with a staggering $188 million added to its products last week.
This figure represents 94% of the total inflows, underscoring the dominant position of Bitcoin in the digital asset landscape. In a contrasting trend, products shorting BTC experienced outflows for the ninth week in a row, amounting to a cumulative $4.9 million. These outflows represent 60% of the total assets under management for these products.
Ethereum, the second-largest digital asset by market capitalization, saw a comparatively modest inflow of $7.8 million, representing a mere 0.1% of AUM in comparison to Bitcoin’s inflow ratio of 0.7%.
Interestingly, this renewed investor interest has not entirely trickled down to altcoins, which saw only minor inflows. $XRP and Solana ($SOL) attracted relatively small sums of $240,000 million and $170,000, respectively. However, this shift in market sentiment did prompt some investors to diversify their portfolios by investing in multi-asset investment ETPs, which saw inflows of $8 million in the past week.
The catalyst behind this renewed positive sentiment is believed to be the recent announcements from several high-profile ETP issuers. These issuers have filed for physically backed ETFs with the U.S. Securities and Exchange Commission, in moves that could unlock a $15 trillion crypto boom.
These bets on cryptocurrency investment products are coming at a time in which Bloomberg Economics has warned that the Bank of England’s (BoE) efforts to curb the UK’s high inflation rate, the highest among the G7 economies, could cause a recession by the end of the year.
The economists predict a mild but prolonged downturn as a result of 13 rate hikes since late 2021 and expect more to come. The economists say that if rates go above 5%, the risk of a financial shock rises sharply, and forecast low growth for this year and next, and inflation above 5% by year-end, more than double the target.
Featured image via Unsplash.