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Crypto Industry Crosses $1B in Inflows Before Year’s End

Crypto asset managers including ProShares, CoinShares, Bitwise, 21Shares and Grayscale have collectively witnessed substantial inflows, surpassing $1 billion for the year. This influx of funds, according to CoinShares’ most recent report, added a noteworthy $293 million to a run of seven weeks in a row of higher investments.

As of November, the total inflows have amounted to an astounding $1.14 billion, making 2023 the third-highest annual inflow year on record. CoinShares head of research James Butterfill noted that total assets under control have increased significantly, by 9.6% in the last week and by an astounding 99% since the beginning of the year. Total assets under management are currently around $44.3 billion, reaching levels not seen since the massive cryptocurrency fund failures in May last year.

The surge in investments was primarily driven by Bitcoin (BTC), with investment products related to the leading cryptocurrency attracting $240 million in inflows. Conversely, short BTC products experienced outflows of $7 million, indicating sustained positive sentiment.

Bitcoin exchange-traded products (ETPs) accounted for almost 20% of the overall BTC trading volume in the past week. This suggests a more active participation of ETP investors in the ongoing market rally, a notable contrast to the trends observed in 2020 and 2021, according to Butterfill.

In the week that followed BlackRock’s filing to establish an Ethereum Trust corporation in Delaware and NASDAQ’s filing for BlackRock’s proposed spot ether ETF, ether-based products witnessed inflows totaling $49 million, the most since August 2022.

Reflecting on the challenges faced by the industry in the preceding year, including a significant drop in digital asset prices, Butterfill acknowledged that the recent surge in inflows indicates a shift in sentiment, particularly among institutional investors. He noted, however, that identifying the exact sources of these inflows into investment products such as exchange-traded funds (ETFs) remains challenging due to the anonymous nature of allocations.

According to the Block’s price statistics, Solana-based funds also had notable inflows of $12.4 million during a week in which the cryptocurrency asset increased by more than 40% and peaked at over $62. At the moment, Solana trades for about $57. Over the past week, ether and Bitcoin have increased by 7.6% and 4.5% respectively and are now trading for $2,042 and $36,693, respectively.

Examining the regional distribution of the inflows, Switzerland, Germany, the United States and Canada emerged as leading contributors, with $50.3 million, $52.9 million, $81.1 million and $105.7 million respectively. Furthermore, the blockchain equities ETFs experienced $14 million in inflows, the highest since July 2022, bringing the net flows for the year to a positive $11 million.

Companies such as HIVE Blockchain Technologies Ltd. (NASDAQ: HIVE) (TSX.V: HIVE) are likely to register more activity as a result of these inflows into the industry after the crypto winter.

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