Investing in Crypto Funds: Largest Weekly Inflows in Over a Year

Crypto Exchange-Traded Products (ETPs) Inflows

According to an October 30 report from asset management platform CoinShares, crypto exchange-traded products (ETPs) saw their largest weekly inflows in more than a year. The inflows for the week ending October 27 totaled $326 million, a significant increase from the $66 million recorded over the previous week.

ETPs are investment funds whose notes or shares are designed to track the price of a particular asset, such as Bitcoin (BTC) or Ether (ETH). Instead of holding these assets directly, some investors prefer to get exposure to crypto prices through funds that can be held in a traditional brokerage account.

An ETP “inflow” occurs when the fund’s price rises faster than its underlying asset, which causes the fund to buy the asset. This is generally seen as bullish for the underlying asset. By contrast, an “outflow” occurs when the fund has to sell the asset because the prices of their notes or shares are declining relative to their target, which is usually seen as bearish.

The CoinShares report showed that the weekly inflows for the week ending October 27 were the highest since July 2022, 15 months ago. This marks the fifth consecutive week of ETP inflows, suggesting that investors are increasingly looking to gain exposure to the Web 3.0 tokens and other cryptos through these products.

The SEC and Web 3.0

CoinShares suggests that investors are optimistic that the U.S. Securities and Exchange Commission (SEC) will approve a spot-based Bitcoin ETF, which could result in inflows to U.S.-based funds after approval. Last week saw the 21st largest increase in inflows ever recorded, with Bitcoin ETPs representing 90% of the total. Solana (SOL) also experienced $24 million in inflows. Ether funds, on the other hand, suffered $6 million worth of outflows.

Despite multiple applications over the years, the SEC has yet to approve a spot Bitcoin ETP. Van Eck amended its application on October 19, while Hashdex met with the SEC on October 25, in an effort to get their spot Bitcoin ETP approved. As the world moves towards Web 3.0, understanding how to get involved in the cryptos and tokens that will power this new era is essential for investors looking to capitalize on the new opportunities that will arise.