Last week, the inflow of cryptocurrencies was nearly $2.2 billion, influenced by the US election and the Federal Open Market Committee (FOMC) meeting.
Investment has increased rapidly, setting a record of $33.5 billion in inflows from the beginning of the year to the present. Meanwhile, the total Assets under Management (AuM) reached an all-time high of $138 billion at the beginning of this week.
Cryptocurrency product inflows approached $2.2 billion last week
The recent CoinShares report attributes the increase in inflows to a combination of the Federal Reserve's accommodative monetary policy and the Republican Party's recent landslide victory in the US election. These two developments have strengthened investors' confidence in the digital asset market.
"The accommodative monetary policy and the Republican Party's landslide victory in the recent US election," wrote James Butterfill of CoinShares in his report.
BTC accounted for $1.48 billion of last week's inflows, emphasizing its dominance in the digital asset space. However, its recent record-breaking price surge has triggered profit-taking, resulting in an outflow of $86.6 million in the latter part of the week. Notably, short BTC products also saw inflows of $49 million, reflecting the hedging activities of cautious investors.
ETH, which experienced outflows the previous week, rebounded strongly with $64.6 million in inflows. This resurgence was fueled by Justin Drake's proposal for the Beam Chain upgrade and the overall pro-cryptocurrency sentiment following the Republican victory.
"Ethereum researcher Justin Drake has proposed the 'Beam Chain' to replace the Beacon Chain, reducing the staking requirement from 32 ETH to just 1 ETH. This move aims to make staking more accessible. Positive," a popular user on X commented on the proposal.
Republicans sweep the presidency, Senate, and House
The Republican Party's landslide victories in the House and Senate have sent a clear signal to the market. 274 pro-cryptocurrency candidates were elected to the House, and 20 to the Senate, indicating a political environment that is increasingly favorable to cryptocurrency adoption. In contrast, 122 House members and 12 Senate members who supported anti-cryptocurrency legislation were elected, according to data from Stand With Crypto.
The election results came at a crucial time, as the Federal Reserve's recent interest rate cuts have added liquidity to the market. Analysts point out that accommodative monetary policy often increases risk-taking, particularly in cryptocurrencies.
Donald Trump's pro-cryptocurrency stance also continues to fuel market optimism. Many expect regulatory clarity to improve under the new administration.
"Last week, post-election, and really all year, it's been all about beta and BTC. The market seems a little tired, but ETF investors still look quite bullish," said Bloomberg ETF expert Eric Balchunas in his comments.
The record-breaking inflows and the rise in BTC prices underscore the growing confidence in the cryptocurrency market. However, the profit-taking trend observed in the latter part of the week reflects investors' caution.
Analysts suggest that the future direction of the market will depend on regulatory developments and the Federal Reserve's monetary policy. Meanwhile, the political support of the newly elected pro-cryptocurrency representatives could provide the regulatory certainty necessary to sustain these trends.
