Crypto Funds See $1.9 Billion Inflow Amid Geopolitical Uncertainty

Global cryptocurrency-based investment funds have shown remarkable resilience amidst escalating geopolitical uncertainties. Data from CoinShares indicates that these funds experienced a net inflow of $1.9 billion last week, marking the ninth consecutive week of net inflows and bringing the total to $12.9 billion during this period. Since the beginning of the year, the recorded net inflow reached a new high of $13.2 billion. James Butterfill, Head of Research at CoinShares, noted that while geopolitical concerns suppressed risky assets last week, cryptocurrencies demonstrated resilience by attracting inflows alongside gold. The total assets under management (AUM) of these funds rose to $179 billion.

Bitcoin (BTC)-based investment products significantly recovered after two weeks of minor outflows. The last week saw a net inflow of $1.3 billion into Bitcoin-based investment products, increasing the AUM to $156.7 billion. A significant part of this inflow originated from spot Bitcoin exchange-traded funds (ETFs) in the United States, which alone attracted a net inflow of $1.37 billion, although small outflows in other countries slightly offset this figure. Short Bitcoin investment products also observed a small net inflow of $3.7 million.

Ethereum (ETH)-based investment products continued to perform positively. Ethereum products attracted a net inflow of $585 million last week, bringing the best performance series since February to $2 billion, which accounts for approximately 14% of the total AUM of $14.9 billion. The spot Ethereum ETFs in the U.S. alone saw a net inflow of $528.2 million. However, funds experienced an outflow of $2.1 million on Friday, ending a 19-day record inflow streak.

XRP-based investment products drew their first net inflow of $11.8 million in three weeks, while Sui-based investment products saw a $3.5 million inflow.

Regionally, the United States led with a net inflow of $1.9 billion. Butterfill noted that investor sentiment was largely positive. Following the U.S., funds in Switzerland, Germany, and Canada saw net inflows of $20.7 million, $39.2 million, and $12.1 million, respectively. Meanwhile, cryptocurrency-based investment products in Hong Kong and Brazil ended the week with net outflows of $56.8 million and $8.5 million, respectively.

Market data indicates that BTC rose by 1.3% over the past week, trading around $107,000, while ETH increased by 5.4%, trading at approximately $2,628. Valentin Fournier, BRN Chief Analyst, stated, “Despite geopolitical risks, the market’s demonstrated strength is encouraging, especially with individual and algorithmic momentum investors stepping back.” However, Fournier added that uncertainty about the timing of expected interest rate cuts, slower asset purchases by central banks, and a weakening of institutional momentum in Ethereum indicate a bumpy road back to record levels.

Cryptocurrency funds have demonstrated remarkable resilience in the face of escalating geopolitical tensions, with Bitcoin and other major digital assets showing steady performance. Despite recent volatility triggered by geopolitical events, such as the military conflicts between Israel and Iran, cryptocurrencies have managed to recover and maintain their value. This resilience is evident in Bitcoin's 656% cyclical gain since 2022, highlighting its ability to withstand global turmoil and suggesting sustained investor confidence.

The performance of digital assets during times of geopolitical uncertainty has been a subject of interest for many investors. In January 2020, for instance, cryptocurrencies rallied in the short term despite tensions between the U.S. and Iran. This pattern has repeated itself, with Bitcoin and other major cryptocurrencies trading higher on Monday morning, recovering from recent volatility. This trend indicates that digital assets are proving robust despite global tensions, suggesting potential growth and sustained investor confidence.

The outlook for Bitcoin remains cautious, with investors weighing global risks, inflation trends, and macroeconomic pressures. However, despite a 3.5% dip, Bitcoin has shown resilience, demonstrating its ability to navigate through uncertain times. This resilience is further supported by the fact that cryptocurrencies such as Bitcoin and Ethereum have been tossed into an unpredictable frenzy, compelling investors to reassess their once-stable positions. This reassessment has led to a more nuanced understanding of the relationship between geopolitical tensions and cryptocurrency performance.

The performance of Bitcoin during times of geopolitical uncertainty suggests that it is more closely aligned with equities than with digital gold. This alignment is evident in the fact that Bitcoin has shown a 0.15% surge, despite the geopolitical tensions. This performance is a testament to the resilience of cryptocurrency funds and their ability to navigate through uncertain times. The steady performance of cryptocurrency funds amidst geopolitical tensions is a clear indication of their potential as a viable investment option.