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After four weeks of outflows, the market for crypto investment products appears to be recovering. For the first time since late October, money flowed into crypto products rather than out last week, with total inflows of just over $1 billion, according to CoinShares. It wasn’t bitcoin or ethereum that stole the show, but once again XRP, which had its strongest week ever thanks to recent ETF launches.
Bitcoin and Ethereum ETFs See Inflows Return #
The inflows align with the slight recovery in the crypto market last week, where bitcoin traded above $91,000 and XRP around $2.20. This recovery was partly driven by cautious expectations of an interest rate cut from the Federal Reserve.
In total, crypto exchange-traded products (ETPs) attracted $1.07 billion (€920 million). Bitcoin attracted the largest share of capital with $464 million.
American providers were primarily responsible for this growth, despite a week of relatively low trading volumes due to Thanksgiving. Fidelity led the list with €198 million in inflows, followed by Volatility Shares (€137 million) and BlackRock (€103 million).
According to CoinShares researcher James Butterfill, the turnaround is largely due to comments from FOMC member John Williams, who said that current monetary policy is “still restrictive.” This statement fueled hopes that a first rate cut could come this month. Rate cuts typically have a positive impact on risky assets like crypto.
XRP’s Largest Single-Week Inflow Ever #
XRP funds had their best week since the inception of such products. With €248 million in new inflows, the currency set a record and even approaches the inflows of ethereum (€266 million). For the entire month, XRP now stands at nearly $680 million in inflows, a completely different trend than bitcoin and ether, which have recorded losses this month.
According to Butterfill, this enormous interest has everything to do with the many ETF launches for XRP. In total, five XRP ETFs have now been launched, including from Canary Capital. An ETF from 21Shares launches today.
Whether the inflows will persist remains to be seen. Many macroeconomic events are on the agenda that could cause significant volatility. Today’s crash, where bitcoin lost 7 percent of its value, once again shows that the period of market unrest is not yet over.