Crypto funds have seen significant inflows in recent weeks as the US presidential election approaches. From October 26 to November 2, approximately $2.2 billion flowed into digital investment products, bringing the year-to-date total to a record-breaking $29.2 billion. This influx marks four consecutive weeks of purchases in crypto products, with a total of $5.7 billion invested, accounting for 19% of all inflows this year.

The recent price increase in the crypto market has led to the total value of assets under management in crypto funds surpassing the $100 billion threshold for the second time, reaching the levels seen in June this year at $102 billion.

Optimism around election outcome as a possible driver

According to James Butterfill, head of research at CoinShares, recent inflows seem partly driven by optimism surrounding the potential outcome of the US election. He notes that in the first few days of last week, interest in crypto was heightened, likely due to increasing expectations of a Republican election victory. Later in the week, however, there was a slight outflow, highlighting Bitcoin's sensitivity to the election results.

In October, similar reasons were cited for the growing investments in crypto, with expectations that a Donald Trump election win would further boost investor optimism.

Bitcoin as the primary beneficiary of new inflows

As in previous weeks, Bitcoin was once again the largest recipient of investments, with approximately $2.2 billion in inflows into Bitcoin products. During the week when the Bitcoin price nearly reached its all-time high, investors also actively bought short-Bitcoin products, with a weekly inflow of $8.9 million.

Ether saw a modest increase, with an inflow of $9.5 million, compared to Bitcoin and Solana, which received $2.2 billion and $5.7 million in inflows, respectively. This trend highlights investors‘ strong preference for Bitcoin over other assets.

Regional shifts in inflows and outflows

The United States was once again the largest contributor to the market, with over $2.2 billion in inflows. In Germany, a modest $5.1 million flowed into crypto funds. Conversely, Canada led the outflows with $24 million, followed by Sweden with $20 million in sales.

Large Bitcoin ETF inflows and potential price fluctuations

The growing interest in Bitcoin ETFs is evident in the lead-up to the election, with, for example, the BlackRock spot BTC ETF recently surpassing the $30 billion mark. While this reflects confidence in the market, some analysts remain cautious. Historically, large inflows into Bitcoin ETFs can potentially lead to market price declines, prompting investors to be aware of possible volatility.

With these developments, the crypto market continues to be dynamic, making it essential to follow trends and make choices that align with personal risk tolerance and long-term goals.