As a seasoned analyst with a decade of experience under my belt, I find myself increasingly intrigued by the rollercoaster ride that is the cryptocurrency market. The latest surge in inflows, reaching $2.2 billion over the past week, is yet another testament to the volatile but captivating nature of digital assets.
The investment in digital currencies experienced yet another significant surge as the upcoming U.S. presidential election nears.
Between October 26th and November 2nd, there was an inflow of approximately $2.2 billion into digital investment products. This brings the total year-to-date (YTD) inflows to a remarkable $29.2 billion, as reported in the latest Digital Asset Fund Flows Weekly Report by CoinShares.
Over the past month, there’s been a continuous surge in investments towards cryptocurrency products, amounting to over $5.7 billion, which represents approximately 19% of all year-to-date inflows.
Just now, the surge in asset prices has taken our managed assets past the $100 billion mark for the second occasion in history, reaching a figure similar to what we saw back in June, which was also $102 billion.
The euphoria around the “prospect of a Republican victory”
According to CoinShares’ head of research, James Butterfill, the latest inflows were partly driven by the euphoria around the possible outcome of the upcoming US presidential election on Nov. 5. He wrote:
“We believe euphoria around the prospect of a Republican victory was the likely reason for these inflows as they were in the first few days of last week, as polls have turned, we saw minor outflows on Friday, highlighting how sensitive Bitcoin is to the US elections at present.”
Previously, Butterfill emphasized comparable factors behind the massive influxes seen in October, crediting increased optimism surrounding a possible victory of Donald Trump in the U.S. elections for the surge in buying activity.
Most inflows came into Bitcoin products
Just as in past instances, Bitcoin (BTC) nearly monopolized recent investments, receiving approximately $2.2 billion during the week. As the Bitcoin price approached record highs last week, crypto investors also demonstrated interest in purchasing short-Bitcoin contracts, with inflows totaling $8.9 million per week.
Although Ethereum (ETH) products brought in about $9.5 million, they still show a stark difference compared to the bullish trend observed in Bitcoin and Solana (SOL). Last week, these two cryptocurrencies recorded inflows of approximately $5.7 million each, as pointed out by Butterfill.
Once more, the United States led the market with a significant injection of approximately $2.2 billion, whereas Germany experienced relatively small inflows totaling around $5.1 million.
Contrarily, Canada and Sweden experienced significant outflows during the previous week, with Canada losing approximately $24 million and Sweden losing around $20 million.
It’s worth noting that the inflow into Bitcoin exchange-traded funds has significantly increased in recent times, particularly leading up to the U.S. elections. On October 30, BlackRock’s spot BTC ETF exceeded a value of $30 billion.
Some experts warn that significant increases in Bitcoin inflows might lead to downward price trends, as historical data shows that substantial Bitcoin ETF purchases often precede bearish market conditions.
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2024-11-04 15:37