Crypto ETPs See $2.2 Billion in Inflows Amid Trump Inauguration Euphoria

Cryptocurrency exchange-traded products (ETPs) experienced their largest inflows of the year last week, with a staggering $2.2 billion in new investments, driven in part by the euphoria surrounding the inauguration of U.S. President-elect Donald Trump. According to CoinShares, a leading investment firm in the crypto space, these inflows marked a historic milestone for the crypto ETP market, bringing the total assets under management (AUM) to an all-time high of $171 billion.

Trump Inauguration Boosts Crypto ETPs

James Butterfill, Head of Research at CoinShares, attributed the surge in crypto ETP investments to heightened optimism surrounding Trump's upcoming inauguration. As Bitcoin (BTC) surged 15% during the past trading week, investor sentiment remained strong, pushing crypto ETPs to record levels.

The $2.2 billion in inflows comes after a quieter week in early January, where crypto ETPs saw modest inflows totaling just $47 million. This sharp increase in investment marks a significant rebound, indicating strong investor confidence in the crypto market as 2025 gets underway.

Bitcoin ETPs Lead the Charge

The overwhelming majority of the $2.2 billion influx went into Bitcoin-based ETPs, which saw $1.9 billion in new investments. This pushed year-to-date (YTD) inflows for Bitcoin ETPs to $2.7 billion. Notably, Bitcoin trading volumes on crypto ETP platforms accounted for 34% of total Bitcoin trading volumes on trusted exchanges last week, reflecting the growing prominence of these investment vehicles in the overall crypto ecosystem.

Despite the price surge, CoinShares' Butterfill pointed out that there were "minor outflows" from short-position ETPs, amounting to $0.5 million, which is atypical for periods following strong price momentum. Typically, positive price movements tend to attract inflows into both long and short positions, making this a curious development.

Ether ETPs Struggle Amid Inflows

While Bitcoin ETPs dominated, Ether (ETH)-based ETPs showed a mixed performance. Ethereum ETPs saw a modest $246 million in inflows last week, somewhat recovering from significant outflows earlier in the year. However, Ether ETPs remain the weakest performers among major crypto assets, with year-to-date outflows still amounting to $28 million.

In contrast, XRP (XRP) continued to show momentum, as XRP-based ETPs attracted $31 million in inflows last week. Since November 2024, XRP ETPs have seen a dramatic surge in investment, with total inflows reaching $484 million.

Regional Trends and Notable ETF Performances

Regionally, the United States led the way in crypto ETP inflows, contributing $2 billion of the total $2.2 billion. Switzerland and Canada also saw healthy inflows, with $89 million and $13 million, respectively.

In terms of specific funds, BlackRock's iShares crypto exchange-traded funds (ETFs) remained a strong performer, with $897 million in inflows last week. Meanwhile, Grayscale's crypto ETFs continued to experience outflows, totaling $145 million for the week. So far this year, Grayscale's crypto ETFs have seen $268 million in outflows, a trend that contrasts with the positive performance of other products on the market.

Conclusion

The surge in crypto ETP inflows reflects a broader trend of rising investor interest in digital assets, fueled by a combination of market optimism and external factors such as political events. With Bitcoin leading the charge and smaller altcoins like XRP showing strong momentum, the crypto ETP market appears poised for continued growth, although challenges remain for assets like Ether. As the market evolves, the interplay of political events, investor sentiment, and product performance will likely continue to shape the landscape for crypto investment products in the coming months.