Cryptocurrency investment products had another successful week, with Bitcoin leading the charge by attracting $419 million in inflows. Digital asset investment products overall saw inflows totaling $407 million for the week of October 5–11, as reported by CoinShares in its latest Digital Asset Fund Flows Weekly Report on October 14.
Recovery from Previous Sell-Off
This fresh wave of inflows comes on the heels of a minor sell-off of $127 million in the previous week, which coincided with stronger-than-expected economic data emerging from the United States. The contrast between the sell-off and the recent inflows highlights the volatile nature of the crypto market and investors’ responsiveness to both economic and political stimuli.
According to CoinShares’ head of research, James Butterfill, the increase in crypto investment products last week was likely influenced more by the upcoming U.S. elections than by shifts in monetary policy. He noted that the stronger economic data had little effect on curbing outflows, suggesting that external factors played a more pivotal role.
Butterfill pointed to polling trends that indicated potential gains for the Republican Party, leading to an “immediate boost in inflows and prices.” The perception that Republicans are generally more supportive of digital assets has further fueled this trend.
On October 10, major media outlets, including The New York Times, reported on new polling suggesting that control of the U.S. Senate may shift from the Democratic Party to the Republican Party after the upcoming elections on November 5. The election will determine the next U.S. president in the contest between Republican candidate and former President Donald Trump and Democratic candidate, Vice President Kamala Harris.
Bitcoin as the Primary Beneficiary
Bitcoin emerged as the “primary beneficiary” of these political shifts, according to Butterfill. With inflows of $419 million, it significantly outperformed other assets in the crypto space. In contrast, short-Bitcoin investment products saw outflows of $6.3 million, indicating a growing confidence in Bitcoin’s long-term potential amid political changes.
In addition to Bitcoin’s success, blockchain equity exchange-traded funds (ETFs) experienced one of the largest weekly inflows of 2024, totaling $34 million. This growth is likely a response to Bitcoin’s recent price surge, which increased over 2% from $61,900 on October 6 to approximately $63,300 on October 12.
Multi-asset investment products recorded minor inflows of $1.5 million, marking the 17th consecutive week of inflows for this asset class. However, Ethereum faced continued outflows, with investors withdrawing $9.8 million from Ether products last week. This trend highlights a divergence in investor sentiment between Bitcoin and Ethereum, with Bitcoin increasingly seen as a safe haven amid political uncertainty.
Continued Positive Trend
The latest inflows continue a significant trend that began in mid-September. According to CoinShares reports, crypto investment products added nearly $2 billion between September 7 and September 28. This consistent growth indicates a renewed interest in cryptocurrency investment, likely driven by both the evolving political landscape and the potential for increased regulatory clarity.
The recent inflows into cryptocurrency investment products underscore the growing influence of political dynamics on market sentiment. As Bitcoin stands out as a primary beneficiary of these shifts, it appears well-positioned to attract further investment leading up to the upcoming elections. With the backdrop of a politically charged environment and fluctuating economic indicators, the cryptocurrency market is set for continued volatility, presenting both challenges and opportunities for investors.
The landscape ahead remains dynamic, and how the political scene unfolds will likely play a significant role in shaping investor strategies and market trends in the coming months.
