Crypto Markets Swell With $12 Billion Surge So Far In 2024, Spotlight On Bitcoin ETFs

The cryptocurrency investment landscape has experienced a notable surge in the early months of 2024, setting new records for capital inflows into crypto funds. Data from CoinShares reveals that more than $12 billion has been injected into crypto investment products globally in just the first quarter of the year.

This figure signifies a substantial increase in investor confidence and interest in digital assets and surpasses the total inflow recorded for the entirety of 2021, which stood at $10.6 billion.

This uptick in investment activity underscores the growing mainstream acceptance of cryptocurrencies. It highlights the pivotal role of new financial products, particularly the US spot Bitcoin ETFs, in attracting significant capital to the sector.

Record Volume And AUM Growth

According to Coinshares, this week alone witnessed inflows nearing $1.8 billion into global crypto exchange-traded funds (ETFs) and exchange-traded products (ETPs). This influx of capital eclipsed the previous annual record, with a substantial portion of these funds channeled into newly launched spot Bitcoin ETFs in the United States.

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

This milestone reflects an evolving investment landscape where digital assets are increasingly recognized for their potential to diversify and grow within investment portfolios.

Interest in crypto investment products is further evidenced by the record trading volume witnessed last week, which soared to $43 billion—nearly 50% higher than the previous peak.

Such trading activity and the recent upswing in cryptocurrency prices have propelled the total assets under management (AUM) across these funds to approach the $100 billion mark.

The US market, in particular, has been at the forefront of this wave, accounting for nearly 100% of the inflows this week, with funds from other regions netting out.

Particularly, $1.55 billion of this week’s inflows, representing over 88% of the total, were attributed to US spot Bitcoin ETFs, including a historic daily net inflow of $1 billion on Tuesday, predominantly into BlackRock’s IBIT ETF.

Challenges And Opportunities In The ETF Space

Speaking of ETFs, despite the overall positive trajectory, the path has not been without its challenges. For instance, the First Trust-SkyBridge’s BTC ETF Trust recently faced a setback when the United States Securities and Exchange Commission (SEC) declared the filing “abandoned.”

This development, shared by senior Bloomberg Intelligence ETF analyst and crypto advocate Eric Balchunas, underscores the regulatory hurdles still faced by some entities in the crypto ETF space.

Balchunas remarked on the potential impact of the First Trust SkyBridge Bitcoin ETF Trust’s approval, suggesting it could have boosted fund inflows by an additional 15%.

The SEC is ordering (in all caps) First Trust SkyBridge Bitcoin ETF to declare their filing “abandoned” today. FT was one of the filers who never jumped back in to the post-BLK race, not sure why. Had they launched prob add 15% to the flows prob as First Trust is a sales MACHINE pic.twitter.com/ruEbFvyFxC

— Eric Balchunas (@EricBalchunas) March 12, 2024

Amid these developments, Bitcoin’s performance continues to captivate investors’ attention. Although the leading cryptocurrency has seen a slight retracement below $73,000, it remains buoyant, trading at $72,577, with a 1.2% increase in the past 24 hours and nearly 10% over the week.

Featured image from Unsplash, Chart from TradingView