A recent report from the asset management platform CoinShares, dated October 30, highlighted a significant surge in weekly inflows for crypto exchange-traded products (ETPs), marking the highest in over a year. The data indicates that inflows reached $326 million for the week ending on October 27, a remarkable increase compared to the $66 million observed just the week before.
Crypto ETPs are specialized investment funds designed to track the prices of major cryptocurrencies such as Bitcoin or Ether. They provide investors with a convenient way to gain exposure to the crypto market's potential without directly purchasing and managing digital currencies. Instead, investors can allocate their funds through these ETPs, which are typically held in traditional brokerage accounts.
An "inflow" occurs when the price of the ETP rises in comparison to the price of its underlying asset. In such cases, the fund acquires more of the base asset, generally considered a positive signal for the asset. Conversely, a price drop of the ETP's notes or shares relative to its target triggers an "outflow," leading the fund to sell off the underlying asset, typically seen as a bearish sign.
CoinShares' data revealed that the recent $326 million inflow is the highest seen in the last 15 months, dating back to July 2022. It also marked the fifth consecutive week of ETP inflows. The increased inflows can be attributed to growing investor confidence, with speculation that the U.S. Securities and Exchange Commission may approve a spot-based Bitcoin ETF in the near future, expected to drive further inflows into U.S.-centric funds.
Interestingly, despite this significant uptick, the current week's inflow only ranks as the 21st largest ever, according to CoinShares. Bitcoin ETPs dominated, accounting for 90% of the week's total inflows. In addition, Solana's SOL experienced a $24 million inflow, riding the wave of bullish market sentiment. However, Ether ETPs seemed to go against the trend, registering outflows of $6 million.
Anticipation continues to build as the SEC considers the approval of a spot Bitcoin ETP. With firms like Van Eck adjusting their applications, as observed on October 19, to align better with the SEC's requirements and Hashdex engaging with the SEC on October 25, the crypto community remains hopeful.