Digital Asset Investment Products See Inflows Surge to $2.2B, Marking Largest Weekly Increase Since July 2023

The surge is being attributed to growing optimism surrounding a potential Republican victory in the upcoming U.S. presidential election.

Digital asset investment products, such as those tracking Bitcoin and Ethereum, attracted a significant $2.2 billion in inflows last week, marking the largest weekly increase since July 2023, according to a report by Coinshares.

This surge in inflows is largely attributed to growing optimism surrounding a potential Republican victory in the upcoming U.S. presidential election, as Republicans are generally perceived to be more favorable toward the digital asset sector.

Bitcoin ( BTC ) was the main beneficiary, recording an impressive $2.13 billion in inflows. The U.S. saw the bulk of these inflows, with $2.3 billion entering the market, while other regions experienced minor outflows, which CoinShares analysts attribute to profit-taking.

The most notable outflows were seen in Canada ($20 million), Sweden ($18 million), and Switzerland ($15 million).

CoinShares analysts noted that the optimism around a potential Republican victory in the U.S. elections is driving much of this inflow, as a change in leadership could result in more favorable regulatory policies for digital assets.

Highlighting the significance of the upcoming U.S. elections for the cryptocurrency market, Pedro Lapenta, Head of Research at Hashdex, told Benzinga, "The upcoming U.S. elections will be crucial for providing regulatory clarity, impacting token regulation and broader industry adoption."

Both major U.S. presidential candidates are viewed as more open to the sector, which could lead to regulatory reforms that ease concerns, particularly among institutional investors and banks.

Lapenta also noted that the market is roughly 180 days past the last halving, a key event that typically triggers explosive growth in Bitcoin prices.

"If historical cycles repeat, October may be the last month before we experience the next bull phase for BTC," he said. "He also noted that this will be the first cycle where regulated products like Bitcoin spot ETFs are widely available, providing institutional investors with new avenues for exposure."

Bitcoin’s price action has traditionally followed global liquidity patterns, and as the Federal Reserve is expected to reduce interest rates to combat inflation, cryptocurrencies like Bitcoin are likely to benefit.

Lapenta emphasized the role of the global liquidity cycle in Bitcoin’s price movements, saying, "BTC's price action tends to follow global liquidity, which is expanding, and this could further support the market."

What’s Next: The upcoming Benzinga Future of Digital Assets event on Nov. 19 will be an important platform for industry leaders to discuss how the evolving regulatory landscape, including the potential outcomes of the U.S. election, will impact the digital asset market.

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