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Investors are turning to digital assets in record
numbers amid the uncertainty related to US elections. Currently, the market
appears to be influenced more by political factors than the outlook on monetary
policy with US$407 million inflow into digital asset investment products.
This is according to CoinShares’ report highlighting
digital asset fund flows. A surprising turn in the polls, favoring Republicans
who are perceived as more supportive of digital assets, has reportedly boosted
Bitcoin and blockchain-related investments.
Bitcoin
Bitcoin experienced inflows of US$419 million, marking
a significant uptick as investors responded to the political shifts in the US.
With the upcoming elections creating a potential turning point in how digital
assets are regulated and perceived, the top crypto is attracting more investors
seeking to hedge against uncertainty.
Conversely, short-Bitcoin products, which are designed
to profit from declines in Bitcoin’s price, saw US$6.3 million in outflows.
This indicates that market participants expect Bitcoin’s price to rise, likely
driven by political developments.
The US was overwhelmingly the primary source of the
inflows, accounting for US$406 million of the total. Canada, although much
smaller in scale, also saw a positive trend, recording inflows of US$4.8
million.
While Bitcoin saw a massive uptick in inflows, other
digital assets painted a more mixed picture. Ethereum, the second-largest
cryptocurrency, continued its trend of outflows, recording US$9.8 million in
withdrawals. This suggests that despite Bitcoin’s success, Ethereum
is facing headwinds, possibly due to its different use cases and investor base.
ETFs
On the other hand, multi-asset investment products
experienced a smaller but consistent inflow of US$1.5 million, marking the 17th
consecutive week of positive inflows. These products, which typically offer
exposure to a basket of digital assets, may appeal to investors seeking
diversification.
Blockchain-related equity exchange-traded funds (ETFs)
also had a strong week, pulling in US$34 million—their largest inflow this
year. This is likely a result of Bitcoin’s recent price increase, which has
reignited interest in blockchain technology and the companies building on it.
This article was written by Jared Kirui at www.financemagnates.com.
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