Crypto Products See $3.4B Inflows as Investors Seek Safe Haven

Crypto investment products experienced significant net inflows of $3.4 billion from April 21-25, marking the largest influx since December and the third-biggest weekly haul ever. This surge in investment was primarily driven by concerns over the impact of tariffs on corporate earnings and the weakening of the US dollar, which led investors to seek digital assets as an emerging safe haven. Bitcoin, in particular, saw a notable increase in value, trading around $94,130 at 2 pm ET, up 10.5% from a week ago.

Nearly $3.1 billion of the inflows went into US spot bitcoin ETFs, while Ethereum ETFs also saw a significant boost with $183 million in net inflows, breaking an eight-week outflow streak. The rapid increase in bitcoin ETF inflows suggests that hedge funds may be employing the "basis trade" strategy, which involves profiting from the difference between BTC's futures and spot prices. According to Q1 13F filings, hedge funds represent approximately 37% of the spot bitcoin ETP assets under management held by professional investors.

However, the investment activity is not solely driven by professional investors. Individual investors and smaller financial advisors also represent a significant portion of the inflows. Ryan Rasmussen, research head at Bitwise, suggested that the flows this week were primarily driven by long-term investors, with a lesser portion attributable to hedge funds deploying the basis trade. This indicates a diverse range of investors contributing to the recent surge in crypto ETF inflows, reflecting a broader interest in digital assets as a safe haven during times of economic uncertainty.