Crypto Markets Boom: Inflows Smash Records in 2024’s First Quarter
The cryptocurrency investment landscape is experiencing a surge in 2024, with record-breaking capital inflows into crypto funds. CoinShares data reveals a staggering $12 billion injected into global crypto investment products during the first quarter alone.
This figure surpasses the entire 2021 inflow of $10.6 billion, signifying a significant boost in investor confidence and interest in digital assets.
Surge in Investment Activity
The uptick in investment activity underscores growing mainstream acceptance of cryptocurrencies. New financial products, particularly US spot Bitcoin ETFs, are playing a pivotal role in attracting significant capital to the sector.
This week alone witnessed nearly $1.8 billion flowing into global crypto exchange-traded funds (ETFs) and exchange-traded products (ETPs), according to CoinShares. This surpasses the previous annual record, with a substantial portion directed towards newly launched US spot Bitcoin ETFs.
Record Volume and AUM Growth
Digital Assets ETFs/ETPs have shattered the 2021 record, with year-to-date inflows reaching $12 billion compared to $10.6 billion for the entirety of 2021. This milestone reflects an evolving investment landscape where digital assets are increasingly valued for their potential to diversify and grow investment portfolios.
Digital Assets ETFs/ETPs have smashed the 2021 record, with inflows following the last few days now sitting at US$12bn ytd compared to US$10.6bn for the whole of 2021. pic.twitter.com/QjPvtRCzGH
— James Butterfill (@jbutterfill) March 13, 2024
Further evidence of investor interest lies in the record trading volume of $43 billion witnessed last week, a nearly 50% increase from the previous peak. This activity, coupled with the recent price surge in cryptocurrencies, has propelled total assets under management (AUM) across these funds to near $100 billion.
US Market Leads the Charge
The US market is at the forefront of this wave, accounting for nearly 100% of the inflows this week. Notably, $1.55 billion (over 88% of the total) stemmed from US spot Bitcoin ETFs, including a historic daily net inflow of $1 billion on Tuesday, primarily into BlackRock’s IBIT ETF.
Challenges and Opportunities in the ETF Space
Despite the overall positive trajectory, the path for crypto ETFs hasn’t been smooth. The First Trust-SkyBridge Bitcoin ETF Trust recently faced a setback when the US Securities and Exchange Commission (SEC) declared their filing “abandoned.”
This development, highlighted by Bloomberg Intelligence ETF analyst Eric Balchunas, underscores the ongoing regulatory hurdles in the Crypto Markets ETF space. Balchunas estimates that the First Trust SkyBridge Bitcoin ETF Trust’s approval could have boosted inflows by an additional 15%.
Bitcoin’s Performance
Bitcoin’s performance continues to captivate investors. While the leading cryptocurrency has seen a slight pullback below $73,000, it remains buoyant, currently trading at $72,577 with a 1.2% increase in the past 24 hours and nearly 10% over the week.
