Crypto exchange-traded products (ETPs), led by Bitcoin (BTC) funds, have broken their one-month negative streak after recording significant inflows over the past week, signaling renewed demand for digital asset-based investment products amid broader market weakness and geopolitical tensions.
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Crypto funds are breaking out of a multi-week bleed
In its latest Digital Asset Fund Flows Weekly Report, CoinShares revealed that crypto investment products recorded inflows of around $1 billion last week, breaking the multi-billion dollar outflow that began in mid-January with no significant outflows.
Cryptocurrency-based funds saw cumulative outflows of $4 billion over the past five weeks, driven by market weakness and overall negative sentiment.
Notably, the US market accounted for most of the negative net flows, while Bitcoin ETPs showed the weakest performance among major cryptocurrencies, with outflows of more than $3.80 billion since January 23.
Now, funds based on the flagship cryptocurrency showed the strongest performance, with inflows of more than $881 million, according to CoinShares data. Although the $3.7 million inflow into short Bitcoin investment products highlights that opinion remains polarized, the report said.
Ethereum investment products posted their strongest week since mid-January, with inflows totaling $117 million. Despite this, the two largest cryptocurrencies by market capitalization Year-to-Date (YTD) remain in a net outflow position. Conversely, the Solana funds saw inflows of $53.8 million last week and inflows of $156 million YTD.
Additionally, the US accounted for the most inflows, with $957 million, while Canada, Germany and Switzerland saw continued inflows of $34.1 million, $31.7 million and $28.4 million, respectively.
“From a macro perspective, it is difficult to attribute the shift in sentiment to a single catalyst. However, previous price weakness, a break below key technical levels and renewed accumulation by large Bitcoin holders appear to have contributed to the reversal,” explains James Butterfill, head of research at CoinShares.
“On a more anecdotal level, recent conversations with clients have been almost entirely focused on identifying entry points rather than reducing exposure to the asset class,” he continued.
Bitcoin ETF Investors Show Diamond Hands
Amid last week’s recovery, Nate Geraci, co-founder of the ETF Institute, highlighted US spot Bitcoin ETF investors, who have “largely shown diamond hands” during the market correction and negative sentiment.
The ETF expert noted that the $6.5 billion cumulative outflow of Bitcoin funds since the October 10 crash was a “drop in the bucket,” compared to the $55 billion in cumulative total net inflows the category has seen since its debut in January 2024.
As reported by NewsBTC, Geraci highlighted that while these big declines are “a walk in the park for long-time BTC investors,” newer ETF investors also seem unfazed by recent market conditions and are “apparently buying the dip.”
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Similarly, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas discusses the performance of spot Bitcoin ETFs over the past two years and confirms, “As an ETF watcher, you know how absurd this strength is amid a 50% decline.”
He stated that the funds’ overall performance is “the real story,” not the $6 billion that came out during the last market downturn, which he said was normal for most assets.
At the time of writing, Bitcoin is trading at $65,582, down 2.2% from the daily time frame.
Featured image from Unsplash.com, chart from TradingView.com