Crypto investment products witness record weekly inflows, Bitcoin ETFs lead

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Various cryptocurrency-based investment products saw their largest weekly inflows since July 2022 in the past week.

According to a weekly report from the European digital asset management firm CoinShares, the market reached total inflows of $199 million. Bitcoin led with $187 million, while total assets under management in cryptocurrency investment products hit a yearly high of $37 billion.

This surge is likely due to the Securities and Exchange Commission approving the first leveraged Bitcoin Futures Exchange Traded Fund (ETF). Volatility Shares, an investment firm based in Florida, offered this service.

The ever-changing trends in the crypto market

There are speculations that the SEC may approve more spots for the Bitcoin ETF soon. As a result, investor interest in Bitcoin derivatives has increased.

Investment management company BlackRock started the trend by filing its Bitcoin ETF on June 15. Other companies are lining up to submit their applications for a spot in the Bitcoin ETF as well, despite no certainty of approval from the SEC.

This is because BlackRock has a strong track record of getting ETFs approved by the SEC – with a 575-1 approval rate.

“The news of the ETF filing is evidence of adoption and interest from top global players, which is, of course, interesting to institutional investors and traders alike,” said the Chairman of digital asset investment fund ARK36, Mikkel Murch.

WisdomTree and Invesco are two examples. The two companies recently sent their second and third applications to the SEC for permission to launch spot Bitcoin ETFs, despite prior rejections. If a spot Bitcoin ETF is approved, cryptocurrency investment will become more accessible. At the same time, it remains regulated for institutional and retail investors.

As of June 25, Bitcoin futures open interest (OI) had increased by about 30 percent from the previous week to $319 million. OI serves as a measurement of all outstanding futures positions yet to be settled.

Ethereum (ETH), on the other hand, only saw inflows of $7.8 million. CoinShares analyst James Butterfill said that this figure shows that “the appetite for Ethereum is less than for Bitcoin at present.”

CryptoQuant data shows that ETH staking inflows increased from 44,352 ETH on Sunday to 63,456 ETH on Monday. However, this level is still below the bullish 100,000 ETH threshold.

Despite the recent uptick, the market is slowing down on Monday as the momentum of filing spot Bitcoin ETFs has faded. Investors have come to terms with the reality that approval is still months away.

The global crypto market capitalization fell by 0.32 percent to $1.18 trillion on Monday evening, per Benzinga. US stocks also slumped on Monday, with the Nasdaq Composite Index and the S&P 500 Index both losing about 1 percent. Investors sold shares of technology companies that have outperformed the market this year.

However, Markus Thielen, the head of crypto research and strategy at Matrixport, predicts Bitcoin will see significant gains in July. Based on trends in previous years, Bitcoin’s prices finished positive in seven out of the last 10 years, with average returns of 11 percent.

“The 2020, 2021 and 2022 returns were 24, 20 and 27 percent, respectively. Hence, Bitcoin could be at $33,000 to $36,000 by August,” said Thielen.

Looking at the uptick in prices

The increase in inflows in the past week was highly driven by the rising prices of crypto assets. Here is the breakdown of the rising inflows and prices.

The London-based company ETC Issuance GmbH reported that its Bitcoin exchange-traded product (ETP), BTCE, had $77.3 million in weekly inflows. This was the highest weekly inflow for BTCE since its launch in 2020.

Meanwhile, ProShare’s Bitcoin Futures ETF $BITO is at the forefront in the US with total weekly inflows of $60.4 million. This figure propelled its asset value to surpass $1 billion.

Its year-to-date gains reached 59.58 percent in market price and 59.62 percent in NAV. Over the last three and six months, $BITO has grown with positive returns of 14.04% for each time frame.

According to ETF Specialist Eric Balchunas, BITO received $65.3 million in weekly inflows – the largest in a year. The fund follows Bitcoin’s market prices by 1.05 percent a year with a 0.95 percent fee.

Grayscale, the world’s largest crypto asset manager, is benefiting from the rising price of Bitcoin. Its discount on the Grayscale Bitcoin Trust (GBTC) has narrowed in recent weeks.

The discount, which is the difference between the price of GBTC and the underlying value of Bitcoin, has been as high as 49 percent in December. However, it has narrowed to 33.55 percent as of June 27, according to Coinglass.

Price-wise, Bitcoin Cash (BCH) has surged by over 100 percent, making it the top-performing cryptocurrency among the largest 100 cryptocurrencies by market capitalization. This price appreciation is evident in the market data from CoinMarketCap on June 27.

Alongside BCH, other crypto assets such as Pepe (PEPE) saw gains of nearly 70 percent. Bitcoin SV (BSV) experienced a 47.3 percent increase during the same period.

The future of crypto and ETFs

Jeremy Allaire, co-founder and CEO of Circle, believes that the SEC will approve new Bitcoin ETFs in the future. He argues that regulators’ past concerns about Bitcoin are being addressed.

“I believe progress is being made with more mature market structures that would support something like that. You have mature spot markets, well-regulated custody infrastructure, and good market surveillance,” said Allaire at the World Economic Forum.

Many people believe that the SEC is more likely to approve spot Bitcoin ETFs if there is a robust market surveillance mechanism in place. This is because such a mechanism would help ensure the market’s integrity and protect investors from fraud.

The mechanism is similar to the approach taken by regulators in Ontario. They required a mature custody ecosystem before approving the first Bitcoin ETFs to trade in Toronto.

Allaire also talked about how Singapore regulators are already looking at the issue. In the meantime, Singapore and Hong Kong are getting ready to establish themselves as “center for the digital asset markets and stablecoins.”

Since Circle is seeing demand for digital dollars in emerging markets, the company will be paying attention to the regulations in these two countries.


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