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Digital asset fund inflows continue, spot BTC ETF could push Bitcoin to $141k - CoinShares

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(Kitco News) - Digital asset investment products have now seen inflows for eight consecutive weeks as total assets under management (AuM) for globally listed products increased $176 million during the week ending Nov. 17, according to the latest fund flows report from CoinShares.

The year-to-date total now stands at $1.32 billion, which shows that interest from institutions is on the rise, albeit a far cry from where it was during the last bull market.

“The inflows remain well behind 2021 and 2020, which saw US$10.7bn and US$6.6bn respectively,” said James Butterfill, head of research at CoinShares. “Trading volumes in ETPs have averaged US$3bn per week, double this year’s average of US$1.5bn.”

Digital asset fund flows. Source: CoinShares

Butterfill added that the "ETP share of total crypto volumes is rising, averaging 11% compared to the long-term historical average of 3.4%, and well above the averages seen in the 2020/21 bull market.”

From a regional perspective, Canada saw the biggest inflows with an increase of $98 million, while Germany and Switzerland saw inflows of $63 million and $35 million, respectively. The U.S., which accounted for the largest share of inflows in the previous report, saw $19 million worth of outflows last week, the largest outflows for any country.

Flows by country. Source: CoinShares

Bitcoin (BTC) continues to account for most inflows, with $155 million invested in these products last week, while short-Bitcoin products saw outflows of $8.5 million.

Flows by asset. Source: CoinShares

Altcoins also continued their streak of inflows, with Solana (SOL), Ether (ETH), and Avalanche (AVAX) seeing increases of $13.6 million, $3.3 million, and $1.8 million, respectively.

The inflows into BTC over the past eight weeks represent 3.4% of the total assets under management, Butterfill said. “We believe this continued positive sentiment is related to the imminent approval of a spot-based Bitcoin ETF in the US,” he added.

A report from digital asset platform Finequia showed that crypto-based ETPs recorded a 91% increase in total AUM between Jan. 1 and Oct. 31. The firm’s study included data on 168 crypto ETPs from 21Shares, Grayscale Investment, VanEck Associates and others.

According to the study, Bitcoin accounts for 75% of the total crypto ETP AuM.

Fineqia CEO Bundeep Singh Rangar also attributed the increase in interest to the possible launch of a spot BTC ETF in the U.S. “The smoke signals are out for the very likely and near imminent approval of Bitcoin Spot ETFs. The market’s simply responding to this positive signaling,” he said.

According to a report released by CoinShares on Friday about the potential impact of spot BTC ETF approval, an estimated $14.4 billion in value could flow into these products in the year after they are listed.

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Based on estimates of $14.4 trillion in addressable assets in the U.S., “One could assume that perhaps 10% invest in a spot bitcoin ETF with an average allocation of 1%, which would equate to US$14.4 billion of inflows in the first year,” Butterfill said. “If this were correct then it would be the largest inflows on record, with the largest so far being in 2021, which saw US$7.24 billion of inflows, representing 11.5% of assets under management.”

“On a proportional basis though, 2021 did not see the largest inflows, that was in 2020, where we saw US$5.5 billion of inflows representing a higher 21.6% of AuM,” he said. “It was also a year where the price rose by 303%, compared to 60% in 2021.”

Based on a model developed by CoinShares, “If we take the aforementioned US$14.4 billion of inflows, the model suggests it could push the price up to US$141,000 per Bitcoin,” Butterfill concluded.

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