Crypto Fund Inflows Jump to $1.76 Billion Spurred By Bitcoin, Ethereum Prices
The crypto market is witnessing a surge of capital inflows as investors are flocking to the leading digital assets, Bitcoin and Ethereum. According to a report by CoinShares, a digital asset manager, crypto fund inflows reached $1.76 billion in the week ending Dec. 3, 2023, the highest level since May 2021.
The report attributes the spike in inflows to the rising prices of Bitcoin and Ethereum, which have both hit 18-month highs in November. Bitcoin topped $42,000 on Dec. 4, 2023, while Ethereum crossed $4,500 on Nov. 30, 2023. The report also notes that the anticipation of the launch of spot Bitcoin ETFs in the U.S. has boosted the sentiment in the crypto market.
Spot Bitcoin ETFs are exchange-traded funds that track the price of Bitcoin directly, rather than through futures contracts or other derivatives. They are seen as a more efficient and cost-effective way for investors to gain exposure to the largest cryptocurrency. Several companies, including Fidelity, VanEck, and Valkyrie, have filed applications for spot Bitcoin ETFs with the U.S. Securities and Exchange Commission (SEC), but none have been approved yet.
However, the SEC has recently started a public comment period for some of the spot Bitcoin ETF applications, signaling that it may be closer to making a decision. The comment period for Fidelity’s Wise Origin Bitcoin Trust is set to end on Dec. 6, 2023, while the comment period for VanEck’s Bitcoin Trust is set to end on Dec. 13, 2023. Some analysts expect that the SEC may approve the first spot Bitcoin ETF in early 2024, which could trigger a massive rally in the crypto market.
Meanwhile, crypto fund inflows have been dominated by Bitcoin and Ethereum, which accounted for 77% and 18% of the total inflows, respectively, in the past week. Bitcoin funds saw inflows of $1.36 billion, while Ethereum funds saw inflows of $317 million. Other crypto assets, such as Solana, Cardano, and Polkadot, also saw positive inflows, but at a much smaller scale.
The report also reveals that the total assets under management (AUM) of crypto funds have reached $74.8 billion, up from $66.5 billion at the end of October 2023. The largest crypto fund manager is Grayscale, with $49.4 billion in AUM, followed by CoinShares, with $7.1 billion in AUM.
The report concludes that the crypto market is entering a new phase of growth and maturity, as institutional and retail investors are increasingly embracing digital assets as a viable alternative to traditional assets. The report expects that the demand for crypto funds will continue to rise, especially if the U.S. approves the first spot Bitcoin ETF in the near future.
