Crypto investment product net inflows see $130m rebound

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As a researcher with a background in digital asset markets, I find the recent trends in weekly investment products quite intriguing. The fact that crypto traders in the U.S. and Hong Kong injected $130 million into digital asset investment vehicles last week, breaking a five-week streak of outflows, is a promising sign for the market.

Last week, there was a reversal of the trend as investors put more money into weekly digital asset investment funds instead of taking it out. Crypto traders based in the United States and Hong Kong were among those who increased their investments during this period.

Last week, I observed an inflow of approximately $130 million into crypto investment products, with the United States accounting for a significant portion of this sum. Notably, Grayscale’s outflows lessened, leading to a moderated impact in the market. Specifically, GBTC recorded its smallest weekly withdrawals in the past five months, amounting to $171 million.

Hong Kong-listed Bitcoin (BTC) ETFs attracted approximately $19 million in investments, yet this figure was dwarfed by the $135 million inflows recorded on Wall Street through over a dozen products. Analysts pointed out that the $8 billion in trading volume signified a declining trend, with the previous month recording an average weekly volume of around $17 billion.

As a crypto investor, I’ve noticed that the share of exchange volumes attributed to Exchange-Traded Products (ETPs) has decreased recently. Specifically, ETPs represented only 22% of the total trading volumes on trusted global exchanges in contrast to the 31% we saw last month.

CoinShares report

Despite a decrease in market prices, the attitude towards Bitcoin among investors resulted in an increase in investments, or inflows. In contrast, for Ethereum, there was a net loss of approximately $14 million in investments.

As an analyst, I’ve observed that the recent surge in Ether (ETH) outflows from cryptocurrency investment products might be linked to the ongoing regulatory uncertainty surrounding U.S. spot Ethereum Exchange-Traded Funds (ETFs). With the Securities and Exchange Commission (SEC) yet to make a decision on these proposed funds, doubts about eventual approvals have grown, leading investors to take their ETH holdings out of investment vehicles.

As an analyst, I’ve observed that recent enforcement actions against entities connected to Ethereum, such as Consensys and Uniswap, as well as crypto platforms like Robinhood, have strengthened the belief that regulatory scrutiny is increasing in this space.

Michael Saylor, a prominent Bitcoin advocate, argued that Ethereum and other alternative cryptocurrencies should be considered unregistered securities based on the Securities and Exchange Commission’s (SEC) past legal actions and reluctance to classify Ether as either a commodity or a security.

Experts predict that the SEC’s ambiguous position towards crypto regulation may shift in response to pending Congressional bills and initiatives, potentially shedding light on which government body will oversee the crypto industry.

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2024-05-13 18:50