In a remarkable turn of events, crypto Exchange-Traded Products (ETPs) have seen a substantial surge in weekly inflows. According to a recent report from CoinShares, a leading asset management platform, the influx hit an astonishing $326 million for the week ending October 27. This starkly contrasts with the $66 million recorded just the prior week.
For those unfamiliar with ETPs, they are investment funds that track the prices of specific assets, including major cryptocurrencies like Bitcoin and Ethereum. Many investors favor ETPs for their convenience in holding shares within traditional brokerage accounts.
When we refer to an ETP “inflow,” it means the fund’s price is rising at a faster rate than its underlying asset, prompting the fund to acquire the asset. This is generally seen as a bullish sign. Conversely, an “outflow” occurs when the fund sells the asset due to a drop in its share price, often viewed as a bearish signal.
The $326 million surge is the highest in 15 months, dating back to July 2022. Moreover, it marks the fifth consecutive week of inflows into crypto ETPs.
One potential catalyst behind this surge, as suggested by CoinShares, is the growing anticipation among investors regarding the possible approval of a spot-based Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC). Such an approval would likely drive further inflows into American funds.
However, not all cryptocurrencies benefited equally from this surge. While Bitcoin ETPs absorbed a dominant 90% of the total inflows, Solana’s SOL experienced a notable $24 million influx. On the flip side, Ether faced a setback with outflows amounting to $6 million.
It’s important to note that, despite numerous applications, the SEC has yet to green-light a spot Bitcoin ETP. Recent efforts by companies like Van Eck and Hashdex, including application amendments and engagements with the SEC, underscore their strong interest in obtaining this approval.
