Crypto Funds See Big January Inflows Amid Token Surge – BNN Bloomberg

(Bloomberg) – The resurgence of digital assets in January finally seems to be encouraging investors to return to the battered world of crypto ETPs.

More than $210 million was poured into exchange-traded products that track cryptocurrencies in January, the most since May, according to data tracked by Bloomberg Intelligence. Total assets under management rose 37% during the month to $19.7 billion, also the highest since May last year, according to data from CryptoCompare.

“It’s quite impressive actually,” said Bloomberg Intelligence analyst Athanasios Psarofagis. “Given last year’s poor year, still having entries, that’s a pretty positive sign for the category.”

About $40 million poured into the ProShares Bitcoin Strategy ETF (ticker BITO), its best month since June, while the Canadian-listed 3iQ CoinShares Bitcoin ETF (BTCQ) saw nearly the same inflow. Meanwhile, crypto-centric funds rounded out the list of the top 10 best performing US equity ETFs year-to-date – Valkyrie Bitcoin Miners ETF (WGMI) rose around 100%, while the VanEck Digital Assets Mining ETF (DAM) added 76%.

Inflows into Bitcoin-based funds “far outpaced movements in funds based on other assets,” wrote Noelle Acheson, author of the “Crypto Is Macro Now” newsletter.

Cryptocurrencies rallied to start the year, buoyed by both optimism that much of the saga around the fall of FTX is in the past, as well as a rise in other cryptocurrency classes. assets, including stocks. Bitcoin, the largest token by market value, advanced around 40% in January, its best month since October 2021, according to data compiled by Bloomberg.

“Expectations of a less hawkish Federal Reserve, China’s reopening, and diminishing recession risks in Europe have meant that risk appetite has increased significantly since Bitcoin hit those November lows,” he said. Fiona Cincotta, senior financial markets analyst at City Index. “The improving market sentiment was reflected in Bitcoin’s dramatic rally in early 2023.”

Yet, given the magnitude of the crypto’s gains over the past month, many say they are unlikely to be sustained – at least not at their current pace.

On the one hand, markets partly rallied on the idea that the Fed may soon pause its interest rate hike campaign, which could help support riskier assets, although the central bank has pushed back. this premise.

Second, the majority of cryptos are well off their pandemic highs, when Bitcoin hit nearly $69,000 in November 2021. It is currently hovering around $23,000, and few, other than the most bullish bulls, see him regain these heights so soon.

“Like all risk assets, the crypto market could be susceptible to further setbacks if economic data released over the next few days confounds the consensus on Fed easing this year,” Acheson said.

–With the help of Olga Kharif and Isabelle Lee.

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