Crypto exchange-traded products (ETPs) have experienced a remarkable surge in investor interest, marking their highest weekly inflows in over a year, as reported by CoinShares, a prominent asset management platform.
The data released on October 30 reveals that inflows for the week ending October 27 amounted to a staggering $326 million, dwarfing the previous week’s meager $66 million.
ETPs are investment instruments that offer exposure to the performance of specific assets, with crypto ETPs typically tracking the prices of major cryptocurrencies like Bitcoin and Ether.
Many investors opt for these funds to gain crypto exposure, avoiding the complexities of holding these digital assets directly, as ETP shares can be held in conventional brokerage accounts.
In the world of ETPs, “inflows” occur when the fund’s price rises more rapidly than the underlying asset, prompting the fund to acquire more of the asset, generally considered a bullish indicator.
Conversely, “outflows” transpire when the fund is forced to sell the asset due to declining note or share prices relative to their target, typically seen as bearish.
CoinShares’ latest report underscores the impressive nature of this surge in investor interest, with the $326 million weekly inflow being the most substantial since July 2022, a span of 15 months. Moreover, this marked the fifth consecutive week of positive ETP inflows.
One potential explanation for this sudden uptick in inflows, according to CoinShares, may be the mounting optimism among investors regarding the potential approval of a spot-based Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC).
Such approval could pave the way for substantial inflows into U.S.-based funds upon acceptance.
Despite the significant rise in inflows, this week’s figures only rank as the 21st largest increase ever recorded, as per CoinShares.
The lion’s share of the weekly inflows went into Bitcoin ETPs, accounting for a remarkable 90% of the total.
Solana’s SOL also benefited from the prevailing market optimism, garnering $24 million in inflows. However, Ether funds experienced an adverse trend, witnessing outflows of $6 million.
Despite numerous applications submitted over the years, the SEC has yet to grant approval for a spot Bitcoin ETP.
Some companies, like Van Eck, recently amended their applications to address the agency’s concerns, while Hashdex engaged with the SEC on October 25 in pursuit of approval for their spot Bitcoin ETP.