According to a report from asset management platform CoinShares dated Oct. 30, crypto exchange-traded products (ETPs) experienced their highest weekly inflows in over a year. For the week ending Oct. 27, inflows reached $326 million, significantly surpassing the $66 million noted in the previous week.
Digital asset investment products experienced inflows of US$326m, marking the largest single week of inflows since July 2022!
This surge is attributed to what we believe is increasing investor optimism that the US SEC is likely to approve a spot Bitcoin ETF in the US.
– #Bitcoin –… pic.twitter.com/AbgsgjcaOz— CoinShares (@CoinSharesCo) October 30, 2023
ETPs are investment funds whose shares or notes aim to mirror the price of a specific asset. In the context of crypto ETPs, they typically track the value of major market-cap cryptocurrencies such as Bitcoin (BTC) or Ether (ETH). Some investors prefer gaining exposure to cryptocurrency valuations through funds instead of holding the assets directly, as shares of these funds can easily be managed within a traditional brokerage account.
An ETP “inflow” occurs when the fund’s price increases more rapidly than its underlying asset, prompting the fund to purchase the asset. This is generally interpreted as a positive sign for the underlying asset. Conversely, an “outflow” happens when the fund needs to sell the asset because the prices of their shares or notes are falling in comparison to their target, which is often viewed as negative.
As per CoinShares’ report, weekly inflows for the week concluding on Oct. 27 were $326 million, the highest figure since July 2022, 15 months earlier. This also marked the fifth consecutive week of inflows for ETPs.
Related: Gary Gensler’s Bitcoin ETF stance is ‘inconsistent’… according to Gary Gensler
CoinShares suggests that one potential reason for the notable increase in inflows may be “growing optimism among investors that the U.S. Securities and Exchange Commission is on the verge of approving a spot Bitcoin ETF in the U.S.,” which could lead to anticipated inflows to U.S.-based funds post-approval.
Despite the significant rise in inflows, this week accounted for only the 21st largest increase ever recorded, according to CoinShares. The bulk of the weekly inflows last week were directed towards Bitcoin ETPs, which made up 90% of the total. Solana’s SOL (SOL) also reaped benefits from the prevailing positive market sentiment, attracting $24 million in inflows. However, Ether funds experienced a downturn, facing $6 million in outflows.
Even with numerous applications submitted over the years, the SEC has not yet approved a spot Bitcoin ETP. Van Eck revised its application on Oct. 19, likely to address the agency’s concerns. Hashdex also engaged with the SEC on Oct. 25 in an attempt to secure approval for their spot Bitcoin ETP.
