Weekly Inflows Hit $69M for Bitcoin Investment Products: Report

A new report by CoinShares showed that digital asset investment products saw $76 million in inflows last week, indicating that investor sentiment continues to improve. Bitcoin funds led the rally with $69 million, accounting for 90% of all inflows.

Bitcoin Funds Lead the Rally with $69M in Inflows

Digital asset investment products recorded $76 million of inflows last week, marking the fourth straight week of inflows, which now stand at a total of $230 million since the beginning of 2023, according to CoinShares. The data underscore significant improvement in investor sentiment, with total investment assets under management (AUM) increasing 39% year-to-date to $30.3 billion.

Bitcoin funds led the latest rally, with inflows in Bitcoin-related investment products surging $69 million last week, representing 90% of all inflows. The remaining portion of inflows was seen in short-Bitcoin investment products, which stood at $8.2 million over the same period, raising concerns over the sustainability of this rally.

“While the short-bitcoin inflows remain relatively small in comparison to the long-bitcoin inflows, the last 3 weeks’ inflows total US$38m, representing 26% of total AuM. So from a relative scaling perspective are meaningful, although this trade so far hasn’t worked well year to date with total short-bitcoin AuM having fallen by 9.2%.”

– Volume 117: Digital Asset Fund Flows Weekly Report

Ethereum investment products saw minor inflows of $0.7 million last week, while altcoins, including Solana, Cardano, and Polygon registered $0.5 million, $0.6 million, and $0.3 million, respectively. On the other hand, multi-asset investment products saw outflows of $2.5 million.

On a regional basis, the US, Canada, and Germany led the last week’s surge, seeing $38 million, $25 million, and $24 million in inflows, respectively. Meanwhile, Brazil saw $1.6 million in outflows over that period, trailed by Switzerland and Sweden.

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Crypto Investors Encouraged by Fed Policy Loosening

The latest surge in weekly digital asset fund inflows comes on the back of a strong recovery in crypto prices over the past month, with Bitcoin (BTC) and Ether (ETH) surging more than 35% and 28%, respectively. January 2023 presented a rally across the board and even became Bitcoin’s second-best January in the last ten years.

The rebound gave much-needed relief to crypto investors following an extremely harsh 2022, during which crypto prices were obliterated due to harsh macroeconomic conditions and collapses of high-profile companies like Terraform Labs and FTX. One of the likely factors behind the recent rally is a looser monetary policy by the Federal Reserve, which hiked interest rates by only 25 basis points last week, as opposed to multiple jumbo 75 bps increases it delivered last year.

While the new hike takes the interest rate target range to 4.5 – 4.75% and indicates that the Fed remains hawkish in its effort to combat inflation, it also suggests that the central bank is willing to offer the market some respite in 2023.

Do you think the worst of the crypto winter is behind us? Let us know in the comments below.