Record $2.9B Inflow into Bitcoin Investment Products

Investment products tied to Bitcoin in the United States have experienced a surge in popularity, with a record $2.9 billion flowing into these products in just one week. According to CoinShares, a digital asset investment company, a total of $13.2 billion has been invested in such products so far this year, resulting in a custody of $74.61 billion worth of Bitcoin. Bitcoin products accounted for the majority of the inflows, making up 97% of the total.

CoinShares analyst James Butterfill noted that digital asset investment products had an all-time high weekly inflow of $2.9 billion, surpassing the previous record of $2.7 billion. It is interesting to note that investment products tied to altcoins like Ether have not been as popular among investors. The inflows for these altcoins have been only a small fraction of what has gone into Bitcoin.

It is worth mentioning that Bitcoin’s price has actually dropped by 7% in the past week, currently trading at $67,418. Despite this decrease, investors have continued to pour funds into Bitcoin investment products. There has been a significant outflow of funds from crypto exchange products outside of the U.S. Investors have withdrawn $738 million from Bitcoin exchange-traded products on exchanges in Germany, Canada, and Sweden, likely shifting these investments to U.S. counterparts.

One reason for the increasing popularity of U.S. Bitcoin ETFs is the lower management fees they charge. While some ETFs charge upwards of 1% per year, U.S. Bitcoin ETFs charge as little as 0% on a portion of their inflows. Since being approved by the Securities and Exchange Commission in January, U.S. Bitcoin ETFs have dominated the spot Bitcoin ETF market, capturing over 80% of the market share.

The success of Bitcoin ETFs in the United States has also influenced regulators’ perspectives on these investment products. The United Kingdom’s Financial Conduct Authority (FCA) and Hong Kong’s Securities & Futures Commission (SFC) have adjusted their stance on Bitcoin ETFs due to their popularity. The FCA stated on March 11 that it would not oppose requests to create a UK market segment for cryptoasset-backed Exchange Traded Notes. Similarly, Hong Kong’s SFC received its first spot Bitcoin ETF application on January 29.