Crypto Exchange-Traded Products (ETPs), led by Bitcoin (BTC) funds, broke their one-month negative streak after recording significant inflows last week, signaling increased demand for digital asset investment products amid broader market weakness and geopolitical tensions.
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Cryptocurrencies are coming out of a multi-week hemorrhaging
In its latest report on digital asset fund flows, CoinShares revealed that crypto investment products registered nearly $1 billion in inflows over the past week, breaking a streak of multibillion-dollar outflows that began in mid-January without significant outflows.
Crypto-based funds have seen a cumulative outflow of $4 billion over the past five weeks, fueled by market weakness and general negative sentiment.
It is worth noting that the US market accounted for most of the net negative flows, while Bitcoin ETP showed the weakest performance among the main cryptocurrencies, recording more than 3.80 billion foreign dollars since January 23.
According to CoinShares, funds based on the flagship cryptocurrency have now shown strong performance, with more than $881 million inflows. Although the $3.7 million inflow into short-term Bitcoin investment products highlights that opinion remains polarized, the report notes.
Ethereum investment products recorded their strongest week since mid-January, registering $117 million worth of inflows. However, the two largest cryptocurrencies by market cap remain in year-to-date (YTD) withdrawal positions. In contrast, Solana’s funds had $53.8 million inflows last week and $156 million for the year.
Additionally, the United States accounted for the most imports at $957 million, while Canada, Germany, and Switzerland contributed $34.1 million, $31.7 million, and $28.4 million, respectively.
“From a macro perspective, it is difficult to attribute the change in sentiment to a single catalyst. However, previous price weakness, a break below key technical levels, and fresh accumulation by large bitcoin holders appear to have contributed to the reversal,” said James Butterfill, head of research at CoinShares.
“On an anecdotal level, recent client discussions have focused almost entirely on identifying entry points rather than mitigating exposure to the asset class,” he said.
Bitcoin ETF Investors Show Diamond Hands
In the wake of last week’s pullback, Nate Gerasi, co-founder of the ETF Institute, highlighted US Bitcoin ETF investors who have “extensively displayed diamond hands” during the market correction and negative sentiment.
The ETF expert observed that the $6.5 billion in bitcoin outflows since the Oct. 10 crash was a “drop in the bucket” compared to the $55 billion in net inflows the category has seen since its debut in January 2024.
As reported by NewsBTC, Gerasi stressed that while these major downsides are “a walk in the park for long-term BTC investors,” new ETF investors are also ignoring recent market conditions and “apparently buying the dip.”
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Similarly, Bloomberg Intelligence senior ETF analyst Eric Balchunas reviews the performance of the Spot Bitcoin ETF over the past two years, confirming: “As an ETF watcher, you know how absurd this strength is against a 50% decline.”
He argued that the fund’s overall performance was “the real story,” not the $6 billion it gained during the recent market downturn, which he concluded was normal for most assets.
As of this writing, Bitcoin is trading at $65,582, down 2.2% on the day.
Featured image from Unsplash.com, Chart from TradingView.com
