Report: Crypto investments hit highest level since July

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An October 9 report from asset manager CoinShares shows that cryptocurrency investment products recorded inflows amounting to $78 million last week, the highest since July.

The top two currencies taking the lion’s share were Bitcoin (BTC) and Solana (SOL). Bitcoin inflows reached $43 million, which takes up 55 percent of the total $78 million. It also enjoyed an increase in trading volumes of 16 percent and a $1.2 million investment in short-bitcoin positions.

Meanwhile, Solana, the eighth largest currency by market capitalization, reached the highest weekly inflows since March 2022. Attracting $23.9 million, it continues to assert itself as the “altcoin of choice” and remains institutional investors’ preferred currency.

The trading volume of exchange-traded products (ETPs) also jumped by 37 percent to reach $1.1 billion. Meanwhile, despite general growth, Ether futures ETFs only attracted $10 million over the first week following their October 2 debut. Compared to Bitcoin ETFs’ post-launch $1 billion trading volume in 2021, the situation indicates that investors are not as bullish.

“It is likely due to poor investor appetite for digital assets at present, and unfair to compare to the Bitcoin futures ETF launches in October 2021, as appetite was much higher for the assets class overall,” the report reads.

Cause of inflows

The bullish turn of events represents a resurgence in favorable market sentiment as Bitcoin finally recovers its price at $28,000. With a rising resistance level, more are willing to re-invest in digital asset investment funds.

Meanwhile, crypto enthusiast Jordan Kinneseth wrote in Kitco that the deteriorating global financial outlook had stimulated the inflows. Some factors contributed to this, with the U.S. reaching record-high debts and oil prices increasing amid escalating conflict in the Middle East.

“We believe the inflows are a reaction to a combination of positive price momentum, fears over U.S. government debt prices, and the recent quagmire over government funding,” CoinShares said in a previous report.

Regional divide

The CoinShares report also shows that 90 percent of inflows into cryptocurrency investment products came from Europe. Germany and Switzerland contributed $37.3 million and $31.3 million, respectively, which accounted for 88 percent of all crypto asset product inflows last week. Meanwhile, the U.S. and Canada combined contributed just $9 million.

Europe gaining the upper hand over the U.S. could be attributed to the region gaining rule clarity while the U.S. stalls its crypto regulations following court cases involving the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and crypto firms.

European Parliament president Roberta Metsola and Swedish rural affairs minister Peter Kullgren signed a new comprehensive regulatory framework for crypto, the Markets in Crypto-Assets (MiCA) rule, after the legislation passed a vote in the European Parliament in April. The framework was signed with a separate law to prevent crypto from being utilized for money laundering purposes, including banning anonymous crypto transactions over €1,000 ($1,070).

The new MiCA law made the region the first major jurisdiction with a clear regulatory framework. Major firms such as Binance praised the initiative, with CEO Changpeng “CZ” Zhao referring to it as a pragmatic solution to common challenges for crypto firms.

“There are now clear rules of the game for crypto exchanges to operate in the EU. We’re ready to make adjustments to our business over the next 12–18 months to be in a position of full compliance,” the CEO said.