The digital asset market experienced a significant boost, with inflows reaching a three-month high of $2.2 billion last week, marking the largest weekly increase since July. This surge in investments is largely attributed to positive sentiment surrounding the upcoming US elections, as reported by CoinShares.
James Butterfill, CoinShares’ Head of Research, noted that the rise in inflows is fueled by expectations from betting markets favoring a Republican win, a party generally perceived as more favorable to cryptocurrency. He commented, “This renewed optimism appears to be driven by increasing expectations of a Republican victory in the forthcoming US elections, as they are typically seen as more supportive of digital assets.”
Data from Polymarket, a blockchain-based prediction market, indicates that Donald Trump, the Republican presidential candidate, has a 61% likelihood of winning, while the party holds a 43% chance of achieving overall electoral success.
This positive outlook has led to a 30% uptick in trading volumes, pushing the total assets under management (AUM) in the sector close to $100 billion.
Bitcoin and Ethereum Show Strength
CoinShares’ report highlights that much of the inflow can be traced back to substantial investments in US-based Bitcoin exchange-traded funds (ETFs). Specifically, inflows into spot Bitcoin ETFs totaled $2.13 billion, following six consecutive days of positive growth. This marks the first week since March 2024 that Bitcoin ETF inflows have surpassed the $2 billion threshold.
While US-based products saw significant inflows, crypto investments in other regions such as Canada, Sweden, and Switzerland recorded outflows of $20 million, $18 million, and $15 million, respectively. Butterfill suggested these withdrawals may reflect “minor profit taking” by investors outside the US.
In the midst of these developments, Bitcoin’s potential climb toward the $70,000 level has drawn the attention of short traders. Investors with a bearish stance allocated $12 million to Short Bitcoin products, indicating a cautious sentiment within the market.
On a more positive note, Ethereum reversed its previous outflow trend, garnering $58 million in inflows. This brings the total inflow for the month to $22.5 million and a cumulative $783 million since the start of the year.
Other notable alternative assets also experienced inflows, with Solana, Litecoin, and XRP attracting $2.4 million, $1.7 million, and $700,000, respectively.