Election Impact: How US Politics Are Reshaping Cryptocurrency Investments

• Bitcoin investment products led the surge with $419 million in net inflows, while Ethereum faced outflows of $9.8 million.
• Blockchain equity ETFs captured $34 million, reflecting the positive impact of Bitcoin’s performance on the market.

A report from CoinShares highlighted a total of $407 million in net inflows globally, marking a stark contrast to the preceding week’s outflows. This development is particularly in light of recent political events in the United States, which appear to be influencing investor sentiment and financial flows within the crypto space.

Bitcoin, was at the forefront of these inflows, drawing $419 million. This resurgence in interest coincides with a decline in investments towards products betting against Bitcoin’s value, which saw outflows of $6.3 million.

The timing of these inflows aligns with fluctuations in U.S. politics, particularly ahead of upcoming elections , suggesting a correlation between political anticipation and crypto market activity.

The rise in Bitcoin investments primarily flowed through U.S. spot Bitcoin ETFs , which alone accounted for $348.5 million. Notably, these funds experienced a strong finish at the week’s end, registering over $200 million in inflows across Monday and Friday alone, reinforcing a renewed confidence among investors.

In contrast, Ethereum-based investment products did not fare as well, continuing a trend of outflows with a net decrease of $9.8 million globally. Despite this, there was a small positive adjustment in the U.S. with spot Ethereum ETFs attracting $1.9 million. This ongoing divergence between Bitcoin and Ethereum investments underscores differing investor perspectives on these leading cryptocurrencies.

Beyond individual cryptocurrencies, the broader digital asset investment sector also saw positive movements. Multi-asset investment products, for instance, recorded their 17th consecutive week of inflows, albeit modest at $1.5 million.

Similarly, blockchain equity ETFs enjoyed significant interest, with inflows of $34 million marking one of the year’s largest upticks, likely spurred by recent gains in Bitcoin’s price.

James Butterfill, the Head of Research at CoinShares, pointed to the U.S. political market as a key driver of these trends. According to Butterfill, the proximity of the U.S. elections and favorable stances towards digital assets by political figures have prompted a discernible impact on investor behavior.

“Investor decisions have likely been more influenced by the upcoming US elections than by monetary policy outlooks,” Butterfill explained.

This is particularly evident following the vice-presidential debate and subsequent polling data, which immediately boosted inflows and cryptocurrency valuations.

The dominance of U.S.-based funds in last week’s investment surge was pronounced, contributing $406 million of the total $407 million recorded. Canada was the only other country to report a notable positive balance, with its crypto funds seeing inflows of $4.8 million.

📈 Digital asset investment products saw inflows of US$407m, #Bitcoin saw inflows totalling US$419m while blockchain equity ETFs saw one of the largest weekly inflows of the year, totalling US$34m.

Get our insights in our full report: https://t.co/3Bz2pA1HOQ pic.twitter.com/kvkSHAqIHo

— CoinShares (@CoinSharesCo) October 14, 2024

Conversely, other regions experienced negligible outflows, highlighting a concentrated interest in North American markets within the global cryptocurrency investment scene.