Even with recent market volatility, cryptocurrency investment products have proven to be surprisingly resilient. Among these, crypto exchange-traded products (ETPs) are the most alluring, luring billions in investor dollars. CoinShares announced on Monday that crypto ETPs had $1.24 billion in inflows for the trading week ending Friday. This influx has catapulted crypto ETPs to historic levels, surpassing yearly inflow records with a new all-time high.
The latest figures represent a remarkably strong trend for crypto-listed ETPs, which despite the bear market across most asset classes have remained resilient. Even with growing geopolitical risks, such as the Israel-Iran conflict, crypto ETPs have pulled in roughly $1.9 billion in inflows. This increase is indicative of their rising popularity as a stable investment alternative.
Record-Breaking Inflows
The inflows into crypto ETPs have hit historic records, with a new all-time high of $15.1 billion. James Butterfill, head of research at CoinShares, noted the importance of this milestone. He pointed out too that investors still have a great deal of confidence in the underlying asset class.
"This marks the longest run of inflows since mid-2021, reflecting continued robust investor sentiment toward the asset," - James Butterfill
These regular inflows punctuate a developing acceptance of cryptos among institutional and retail investors underway.
Market Dynamics
Most of the large crypto assets including Bitcoin and Ether have experienced cascading price declines. At the same time, crypto ETPs resisted this dip, reflecting that investment flows are increasingly decoupling from short-term market price movements. This difference represents a notable turn in investor sentiment. They’re beginning to view crypto ETPs as a long-term investment opportunity rather than just a speculative trading vehicle.
"This sentiment was further supported by minor outflows from short-Bitcoin products, which totalled $1.4 million," - James Butterfill
This changed in mid-September when minor short-Bitcoin products’ outflows showed signs of a confident investor. This lends credence to Bitcoin’s strong long-term fundamentals narrative.
ETF Performance
Even with the overall net positive trend, some crypto ETFs were subject to outflows last week. Both ARK Invest and Fidelity Investments saw outflows of $188 million and $62 million, respectively. Outflows from other crypto ETPs were larger. The opposite happened with strong inflows into other crypto ETPs tipping the balance, pushing the entire asset class to a net positive flow.
Individual ETFs can perform quite differently based on a few major considerations. Factors such as the investment strategy, expense ratios, and investor inflows play just as big of a role. Although the outflows that we have seen so far this week with some ETFs are short-term, trends indicate that demand remains undeniably strong for crypto investment products.
