Crypto investment products have started the year 2024 on a strong note, with a total of $151 million in inflows recorded during the first week, according to a report.
Most of these inflows were dominated by Bitcoin-based funds, which added a substantial $113 million to their assets under management.
Bitcoin funds take the lead
The surge in Bitcoin-based fund inflows can be attributed to the highly-anticipated imminent approval of a spot Bitcoin ETF in the United States. Investors seem to be positioning themselves ahead of this potentially market-shifting event, as they poured significant capital into Bitcoin-related investment products.
Aside from Bitcoin, blockchain equities also saw substantial inflows, totaling $24 million during the same week. This indicates a broader interest in the crypto and blockchain than digital currencies.
Short Bitcoin products experience minor outflows
Interestingly, short Bitcoin products registered minor outflows of $1.1 million during the same period. This is contrary to expectations that launching a Bitcoin ETF in the U.S. might lead to a “buy the rumor, sell the news” scenario, where investors would bet against Bitcoin prices after the ETF approval. However, the data shows this has not happened in recent weeks.
Spot Bitcoin ETF approval looms
The growing interest in Bitcoin investment products comes as several applicants, including prominent firms like BlackRock, Ark Invest/21Shares, VanEck, Fidelity, and Valkyrie, filed amended S-1 forms detailing proposed sponsor fees and other crucial information. This marks the final step in the approval process before the potential launch of a spot Bitcoin ETF.
Bitcoin’s price movement
Bitcoin’s price briefly surged above $45,000 following the filings, indicating the market’s anticipation for a spot Bitcoin ETF. Bitcoin is currently trading at $44,860, as The Block’s price page reported.
Regionally, the United States accounted for the lion’s share of last week’s fund inflows, with 55% coming from U.S. exchanges. This is noteworthy as spot Bitcoin ETF products have not yet been launched in the country. Germany and Switzerland-based funds also attracted significant inflows, accounting for 21% and 17% of the total inflows, respectively.
Ether investment products show resilience
In addition to Bitcoin, Ether investment products demonstrated resilience, recording inflows of $29 million during the same week. Over the past nine weeks, these products have seen inflows totaling $215 million, marking a significant turnaround in sentiment.
Moreover, there is speculation that the U.S. Securities and Exchange Commission (SEC) may approve a spot Ether ETF product later in the year, which could further boost investor interest in Ethereum.
While Bitcoin and Ether were spotlighted, several altcoins also experienced positive fund flows. Cardano, Avalanche, and Litecoin-based funds saw inflows of $3.7 million, $2 million, and $1.4 million, respectively. These figures reflect growing investor interest in a diverse range of cryptocurrencies.
However, it wasn’t all positive news for the crypto market. Solana-based products had a rough start to the year, registering $5.3 million in outflows.
This comes as the value of Solana experienced a notable decline of over 10%. It’s essential to note that cryptocurrency markets can be highly volatile, and investor sentiment can shift rapidly.