Highlights:
- Digital asset inflows hit $407 million, driven by US investors amid a political shift favoring Republicans before the upcoming elections.
- Bitcoin saw inflows of $419 million, becoming the main beneficiary of the political climate, while short Bitcoin products saw outflows.
- Blockchain equity ETFs attracted $34 million, one of the largest weekly inflows this year, likely due to rising Bitcoin prices.
Digital asset inflows reached $407 million last week. This surge comes as investors respond to a political shift toward the Republican Party ahead of the U.S. elections. A report from CoinShares shows that investor decisions are influenced more by politics than by monetary policy.
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[COINSHARES] Digital asset investment products see $407M inflows, driven by US elections, with Bitcoin leading gains at $419M while short-Bitcoin sees $6.3M outflows and Ethereum faces $9.8M outflows pic.twitter.com/290f0qhJhr
— BecauseBitcoin.com (@BecauseBitcoin) October 14, 2024
Political Climate Drives Investment Surge
Stronger-than-expected economic data usually impacts investment flows. Despite this, outflows persisted until political factors shifted. The recent U.S. vice-presidential debate and polls indicate a swing toward Republicans. Investors perceive Republicans as more supportive of digital assets. This led to immediate inflows and price increases.
Consequently, the United States accounted for $406 million of the total digital asset inflows. This underscores the domestic impact of the political landscape. Additionally, Canada recorded notable inflows amounting to $4.8 million.
James Butterfill, Head of Research at CoinShares, noted:
“This trend is evident in the fact that stronger-than-expected economic data had little impact on stemming outflows, whereas the recent U.S. vice-presidential debate and a subsequent shift in polling towards the Republicans led to an immediate boost in inflows and prices.”
Bitcoin Becomes Primary Beneficiary
Bitcoin became the primary beneficiary of these political shifts. Inflows totaled $419 million, indicating heightened investor confidence in Bitcoin amid the political climate. In contrast, short Bitcoin investment products experienced outflows of $6.3 million, reflecting a decrease in bearish sentiment.
U.S. spot Bitcoin exchange-traded funds (ETFs) played a substantial role. They accounted for $348.5 million in net inflows. Despite net daily outflows from Tuesday to Thursday, the week began and ended strongly. Over $200 million in positive flows occurred on both Monday and Friday. BlackRock’s IBIT spot Bitcoin ETF led the inflows, adding $140.6 million. Meanwhile, Grayscale’s GBTC product saw net outflows of $31.5 million.
Blockchain ETFs and Ethereum Trends
Blockchain equity ETFs also saw significant activity. They recorded one of the largest weekly inflows this year, totaling $34 million. This surge likely responds to recent Bitcoin price rises. It indicates increased investor interest in blockchain-related equities. Multi-asset investment products marked their 17th consecutive week of inflows. They recorded a modest amount of $1.5 million.
In contrast, investors continued to withdraw funds from Ethereum-based products. Last week, $9.8 million exited the funds globally. Despite the introduction of U.S. spot Ethereum ETFs, which recorded $1.9 million in net inflows, investor sentiment toward Ethereum remained cautious.
The political developments influencing these digital asset inflows are also reflected in predictive markets. According to the decentralized predictions platform Polymarket, Republican candidate Donald Trump leads Democrat Kamala Harris. The odds are 54% to 45.3% to win the presidential election on November 5. Furthermore, Polymarket indicates a 78% chance of a Republican Senate. There is a 38% likelihood of a Republican sweep compared to 17% for the Democrats.
The surge in digital asset inflows indicates growing confidence amid political shifts in the digital asset market. Investors are positioning themselves ahead of the elections, expecting favorable outcomes for digital assets. As a result, the digital asset market is experiencing heightened activity.
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