Cryptocurrency exchange-traded products (ETPs) have experienced their most substantial weekly inflows in over a year, according to a report from the asset management platform CoinShares on October 30. Inflows surged to $326 million in the week ending October 27, a significant increase from the $66 million reported the prior week.
ETPs are investment funds designed to track the price of specific assets through notes or shares. In the context of cryptocurrency ETPs, they typically mirror the price movements of large-cap cryptocurrencies like Bitcoin and Ether. Some investors prefer this approach to gaining exposure to cryptocurrency price fluctuations as they can hold shares of these funds within traditional brokerage accounts, rather than managing the assets themselves.
The concept of ETP "inflows" arises when the fund's price increases more rapidly than its underlying asset, leading the fund to purchase that asset, a situation usually viewed as bullish for the asset. Conversely, an "outflow" occurs when a fund must sell assets because the note or stock price declines relative to its target, generally considered bearish.
For the week ending October 27, CoinShares reported weekly inflows of $326 million. This marks the highest level since July 2022, or 15 months ago, and signifies the fifth consecutive week of ETP inflows. CoinShares suggested that the sudden surge in inflows could be linked to the "growing investor optimism that the SEC is preparing to approve a spot-based Bitcoin ETF in the U.S." Such approval could potentially lead to an influx of funds upon its authorization.
Despite this significant rise in inflows, CoinShares noted that it was only the 21st largest increase on record. The majority of these inflows last week were attributed to Bitcoin ETPs, accounting for 90% of the total. Solana's SOL also benefited from the market's optimism, with inflows amounting to $24 million. In contrast, Ethereum ETPs experienced an outflow of $6 million.
The U.S. Securities and Exchange Commission (SEC) has yet to approve a spot Bitcoin ETP, despite numerous applications submitted over the years. In a bid to meet the SEC's concerns, Van Eck revised its application on October 19. Hashdex also engaged with the SEC on October 25, seeking approval for its spot Bitcoin ETP.
