Crypto investment products attracted $176 million in new inflows as investors decided to buy the dip during a recent market slump. It’s not every day that people rush to pour money into assets when prices are down, but that’s exactly what happened.
The total Assets under Management (AuM) of these investment products had fallen to $75 billion after a rough correction, wiping out more than $20 billion. But the market quickly bounced back, with AuM now sitting at $85 billion.
Data shows that trading in exchange-traded products (ETPs) hit $19 billion for the week, way above the usual $14 billion weekly average for the year.
The strong confidence in crypto globally
It wasn’t just a few isolated regions seeing these inflows. It was a global trend. Investors from the U.S., Switzerland, Brazil, and Canada all poured money into crypto assets.
The U.S. led the pack with $89 million in inflows, followed by Switzerland with $20 million, Brazil with $19 million, and Canada with $12.6 million.
Interestingly, while the U.S. saw the most inflows for the week, it’s still the only country showing net outflows for the month, totaling $306 million.
So, while the recent activity is promising, it doesn’t completely erase the broader trend of outflows that the U.S. has been experiencing this month.
Ethereum came out as the biggest winner during this period, soaking up $155 million in inflows. This brings its year-to-date inflows to $862 million, the highest since 2021.
A big chunk of this enthusiasm for Ethereum is due to the recent launch of U.S. spot-based ETFs, which seem to have reignited interest in the second-largest cryptocurrency by market cap.
Bitcoin’s having it rough
Bitcoin, on the other hand, had a bit of a mixed week. It started off with outflows, but by the end of the week, it managed to pull in $13 million in inflows.
What’s particularly noteworthy here is the exodus from short Bitcoin ETPs, which saw their largest outflows since May 2023, totaling $16 million.
This drop reduced the AuM for short positions to its lowest level since the start of the year.
The market last week was downright chaotic. Geopolitical tensions and shaky economic forecasts are making everyone nervous. Bitcoin’s price only moved by 0.9% over the week, but that doesn’t tell the whole story.
The price fluctuated by as much as 23.6% at one point, which is a level of volatility we haven’t seen since February.
Spot ETFs also recorded modest outflows, with around $170 million in net outflows. This followed roughly $80 million in outflows the previous week.
These outflows happened despite the huge market downturn where Bitcoin’s price dropped from $68,250 to $58,150 in just two weeks—a drop of around 15%.
Since the end of July, total open interest in Bitcoin has dropped by about 12%, falling from $4.6 billion to $4.1 billion.
This drop in open interest is directly linked to the major liquidations that have been sweeping through the market. When traders get liquidated, it creates a snowball effect, driving prices even lower.
There’s a clear correlation between what’s happening on both centralized and decentralized exchanges and the recent price action. The reduction in leverage, while causing short-term price drops, isn’t necessarily a bad thing.
In fact, it could be a positive move in the long run. By reducing leverage, the market is less likely to face a more severe correction down the line.
Over-leveraging can lead to unsustainable levels that set the stage for a bigger crash if things go south. So, while it’s been a wild ride lately, the inflows into crypto investment products show that many investors are still bullish.
