Net inflows of digital asset products (crypto) reached $2.2 billion globally, the highest since July. The surge is occasioned mainly by heightened optimism about the United States elections.
Investors hope for a favorable political environment that will help make the regulatory landscape for cryptocurrencies more favorable to institutional and retail investors.
The data from CoinShares shows a stark reversal from previous outflows, signaling a renewed interest in the crypto market.
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In particular, most of the inflows originated from the United States, with $2.3 billion in investments. Market participants believe a potential Republican-led government could enact crypto-friendly regulations, further encouraging investment in digital assets.
Consequently, trading volumes in crypto investment products worldwide have risen by 30%, demonstrating greater demand for exposure. Such an increase in trading activity shows investors’ positive attitude toward the future of digital assets.
Bitcoin Spot ETF Drives $2.13 Billion Crypto Inflows
While the United States was the top global inflowing market, other markets performed well. Inflows to Canada were $20 million, to Sweden and Switzerland $18 million and $15 million, respectively.
A big green ball in this widespread increase indicates that the crypto investment products are attracting more interest from outside the US market.
Rising Bitcoin prices drove $2.13 billion inflows into Bitcoin Spot ETF, making it one of the booming ETFs in the past week.
Short Bitcoin products also attracted $12 million in inflows, the most since March. This uptick in Bitcoin-related products indicates investors are preparing for price swings later this month or in the next quarter when major market events occur.
Ethereum, Solana, Litecoin, and XRP, among other digital assets, saw positive inflows. With $2.4 million, Solana came second, Litecoin at $1.7 million, and ending with $0.7 million for XRP. While these gains will be celebrated, multi-asset products saw $5.3 million in outflows, snapping a 17-week streak of consecutive inflows.
FOMC Rate Cuts Spur Investment Optimism
Due to recent inflows, Total Assets Under Management (AUM) in digital asset funds is now close to $100 billion. This comes after a sharp fall in AUM earlier this year when the funds saw their AUM decline to $75 billion as markets corrected. In August, however, a rebound took hold, and AUM climbed back up to $85 billion as flows recovered.
Interestingly, net inflows of $321 million into various crypto products also took place in September. The influx of capital was driven mainly by asset management giants such as BlackRock, Fidelity, Bitwise, and Grayscale Investments.
The sector contributed massively to the rebound as the crypto markets tried to regain their footing after two consecutive outflows.
Additionally, good macroeconomic conditions have helped to green up market sentiment. Finally, the Federal Open Market Committee (FOMC) has cut interest rates by 50 basis points, setting a more favorable environment for investors. This decision and the anticipated 25 basis point cut in November have buoyed hope in the digital asset space.
