Fresh Inflows Into Digital Asset Investment Products
Fresh off Bitcoin’s surge past $37,000, CoinShares Head of Research James Butterfill told Decrypt on Friday that investors have poured over $1.07 billion into digital asset investment products so far this year. This represents a notable jump from the $847 million in annual inflows that CoinShares reported Monday.
The report covers allocations to products like Grayscale’s Bitcoin Trust (CBTC) and Bitwise’s 10 Crypto Index Fund (BITW). Butterfill noted that this year is the third largest year on record in terms of pure inflows since 2015, reflecting a lot of demand and interest.
Change in Sentiment Among Investors
Despite a steep drop in digital asset prices last year, Butterfill believes the recent deluge of inflows represents a change in sentiment among investors, especially institutions. He noted that large chunks of inflows indicate institutional buying, which is typically hard to track due to anonymous allocations.
Main Driver of Bitcoin’s Rally
Anticipation for a spot Bitcoin ETF on Wall Street has been the main driver of Bitcoin’s recent rally, with products associated with crypto’s largest coin seeing $1.03 billion in inflows this year, representing 96% of allocations according to CoinShares.
Interest in Ethereum-Based ETF
BlackRock is laying the groundwork for an Ethereum-based ETF, signaling growing interest in moving capital into digital asset investments. Over the past week, Ethereum has increased 16% to around $2,100.
Ethereum as a Deflationary Asset
Activity associated with altcoins on the Ethereum network has caused Ethereum to turn deflationary again, and annual outflows associated with Ethereum have decreased by $30 million since CoinShare’s report on Monday.
Hot Take: Increased Institutional Interest Driving Inflows Into Digital Assets
Institutional interest is driving significant inflows into digital asset investment products, signaling a change in investor sentiment. The anticipation for a spot Bitcoin ETF on Wall Street and the groundwork being laid for an Ethereum-based ETF by BlackRock are key factors contributing to the surge in cryptocurrency investments. With large asset managers like Franklin Templeton and BlackRock entering the crypto space, there is less stigma associated with moving capital into digital assets. As institutional interest continues to grow, it is expected that inflows into digital asset investment products will continue to rise.
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