(Kitco News) – Digital asset investment products have returned to their winning ways as the week ending May 24 marked the third consecutive week of net inflows into globally listed cryptocurrency funds, with total assets under management rising $1.05 billion.
The inflows helped push the cumulative flows for 2024 to an all-time record of $14.9 billion, according to James Butterfill, Head of Research at CoinShares.
“Recent price rises have also pushed total digital asset ETPs to US$98.5bn,” Butterfill noted. “Weekly ETP trading volumes have also risen by 28% to US$13.6bn.”
Breaking it down by region, the U.S. continued to account for the bulk of flows with $1.03 billion flowing into U.S.-listed products.
“Germany and Switzerland also saw inflows of US$48m and US$30m respectively,” Butterfill said. “Disappointingly, since the initial positive launch of Bitcoin spot-based ETFs in Hong Kong, (which saw US$300m in the first week) there have been further outflows last week of US$29m.”
Bitcoin (BTC) ETPs accounted for the majority of inflows, taking in $1.01 billion last week while short Bitcoin products recorded outflows of $4.3 million, “suggesting sentiment is turning broadly positive despite the recent price rises,” Butterfill noted. “This is likely due to investors interpreting the FOMC minutes and recent macro data as mildly dovish.”
Notably, Grayscale’s GBTC only recorded $15 million in outflows during the week after suffering $17.56 billion in outflows year to date.
“Ethereum (ETH) saw inflows of US$36m for the week, the highest since March and likely an early reaction to the approval of ETH ETFs in the United States,” he said. “Solana also saw inflows of US$8m last week.”
Touching on the topic of the newly approved spot Ether ETFs, analysts at Bitfinex said: “While it is certainly positive for the industry as a whole that further regulated vehicles are now being made available to access crypto assets, the SEC has made it clear that, in the case of ETH, no ETFs will be approved that seek to distribute to investors ETH staking rewards.”
“With that being the case, it is possible that more investors might be drawn to investing directly in ETH itself, leaving them free to stake the asset and earn additional returns,” they said. “It suggests that the enthusiasm for ETH ETFs might not be as significant as that of BTC ETFs to date.”
The pace of inflows into spot BTC ETFs also appears to be back on the rise, especially following the announcement that pension funds and other large institutional investors have started allocating to these products.
“Indeed, as of May 24th, BTC ETFs achieved a record streak of 10 consecutive days of inflows, with BlackRock's IBIT leading the charge at $16.35 billion,” Bitfinex said. “Also, a telling indicator was that last week’s ETH price surge was driven by increased activity in the perpetual futures market.”
“The $4,000 resistance level remains a key psychological barrier, and we see potential for an uptrend if broken, although short-term volatility and consolidation are expected,” they said. “If buyers break through the $4000 resistance and sustain the bullish momentum, a robust uptrend could emerge in the short term, potentially targeting a new all-time high. However, the price is expected to undergo a phase of sideways consolidation with increased volatility before making its next significant move.”
