The digital asset investment landscape continues to draw substantial interest, with inflows maintaining a positive trajectory for fourth consecutive week.
Last week, the sector saw an influx of $245 million, with year-to-date (YTD) inflows reaching a record $20.5 billion, according to a recent report from CoinShares.
Furthermore, trading volumes reached their highest levels since May, hitting $14.8 billion for the week, largely driven by the recent launch of Ethereum ETFs.
Bitcoin Products Continue to See Inflows
Bitcoin products have continued to attract significant investments.
Last week alone, Bitcoin saw inflows amounting to $519 million, bringing its month-to-date inflows to $3.6 billion and YTD inflows to an unprecedented $19 billion.
The surge in investment is believed to be influenced by the political climate in the United States, particularly with comments from the election campaign suggesting Bitcoin could be considered a strategic reserve asset.
Additionally, the anticipation of a potential rate cut by the Federal Reserve in September 2024 has bolstered investor sentiment towards Bitcoin.
The introduction of US spot-based Ethereum ETFs has also generated considerable interest, recording some of the highest inflows since December 2020.
These newly issued ETFs attracted $2.2 billion in inflows, while trading volumes in Ethereum exchange-traded products (ETPs) increased by a staggering 542%.
However, this influx is partially attributed to Grayscale seeding its new Mini Trust ETF with approximately $1 billion from its existing closed-end trust.
The move may explain the consistent outflows from Grayscale’s legacy trust, which saw $1.5 billion in outflows last week, resulting in a net outflow of $285 million.
According to CoinShares, digital asset investment products saw $245 million in inflows last week, including $519 million in Bitcoin, bringing its inflows so far this month to $3.6 billion and its year-to-date inflows to a record $19 billion. Ethereum saw a net outflow of $285…
— Wu Blockchain (@WuBlockchain) July 29, 2024
Trump’s Bullish Remarks Ignite Bitcoin Rally
Bitcoin’s market dynamics have recently been invigorated by former President Donald Trump’s bullish remarks on the cryptocurrency, Shubh Varma, CEO and Co-founder of Hyblock Capital, said in a recent note.
During his speech at the Bitcoin conference, Trump proposed the dismissal of SEC Chair Gary Gensler and suggested establishing a strategic Bitcoin reserve, even drawing comparisons between Bitcoin’s market capitalization and that of gold.
“Such a pro-crypto stance from a major political figure was almost unimaginable just two years ago, signaling a significant shift in the narrative surrounding Bitcoin and its potential future,” Varma said.
He also noted that the growing institutional interest in Bitcoin further supports this optimistic outlook.
The State of Michigan Retirement System has allocated approximately 5% of its assets under management to Bitcoin ETFs, making it the second state pension fund to embrace this digital asset, following Wisconsin.
Additionally, Jersey City’s municipal pension plan, as announced by Mayor Steven Fulop, is set to invest in Bitcoin through exchange-traded funds.
The broader economic environment also plays a crucial role in shaping the bullish sentiment towards cryptocurrencies.
The anticipation of interest rate cuts in September has historically driven investors towards alternative assets like Bitcoin, in search of higher returns.
Moreover, market sentiment among retail investors suggests a potential upside.
Data from Binance indicates that only 45% of retail accounts are currently long on Bitcoin, a relatively low figure compared to the past 90 days.
“This skew towards short positions is significant, as historically, such an imbalance has often preceded strong upward movements in Bitcoin’s price,” Varma said.
“With the majority of retail accounts positioned short, the potential for a short squeeze and subsequent rally is heightened.”
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