Markets
$2B Crypto Funds Enter Market Amid Fee Cut Buzz
The cryptocurrency market is buzzing with renewed optimism as investment funds witness a historic surge in inflows. CoinShares, a leading digital asset manager, reported a record Inflow of US$2 billion into cryptographic funds in just one week, surpassing the entire month of net inflows in May.
This positive trend, which has now spanned five consecutive weeks, has boosted total assets under management (AUM) in crypto funds back above the coveted $100 billion mark, a level last seen in March 2024.
Bitcoin ETFs fueling the fire
Bitcoin, the undisputed king of cryptocurrencies, remains the main focus of interest for investors. The recent launch and sustained flows into US-approved spot Bitcoin ETFs are a key driver of current market sentiment.
These exchange-traded funds, which allow investors to hold Bitcoin without directly owning the digital asset, saw $890 million coming in on June 4 alone, marking their third biggest day of inflows ever.
This enthusiasm for Bitcoin ETFs suggests a growing appetite for regulated and accessible ways to participate in the crypto market, potentially attracting a wider range of investors.
Ethereum Shines, Altcoins Show Promise
While Bitcoin takes center stage, Ethereum, the second largest cryptocurrency, is also enjoying a strong run. Ethereum funds raised nearly $70 million last week, marking their best week since March 2024.
CoinShares attributes this positive flow to investor anticipation surrounding the upcoming launch of spot Ethereum ETFs in the US. Approval of these ETFs could further legitimize the Ethereum ecosystem and unlock investment potential.
In addition to the two major coins, altcoins such as Fantom and XRP are also experiencing a resurgence in investor interest, with inflows of $1.4 million and $1.2 million, respectively. This broader market participation suggests a potential return of investor confidence across the crypto landscape.
CoinShares said it observed inflows were unusually widespread across nearly all providers, along with a continued reduction in outflows from incumbents.
They attribute this change in sentiment to weaker-than-expected macroeconomic data in the US, which has raised expectations of an imminent monetary policy rate cut.
Total Crypto Market Cap at $2.4 Trillion on Daily Chart: TradingView. with
Crypto Price Stagnation, Economic Uncertainty
Despite the increase in fund flows, cryptocurrency prices have not exhibited a corresponding significant upward movement. This disconnect can be attributed to several factors, including persistent investor uncertainty surrounding the future of US economic policy.
The current trend of record inflows into crypto funds paints a positive picture for the future of the market. The growing popularity of regulated investment vehicles like spot Bitcoin ETFs means growing institutional acceptance and potentially broader investor adoption.
Featured image from Vecteezy, chart from TradingView