In the concluding week of 2023, cryptocurrency investment products experienced substantial inflows, totaling $243 million and contributing to a yearly cumulative inflow of $2.2 billion, according to CoinShares.
Bitcoin (BTC) took the lead with over $1.9 billion in inflows, constituting 86% of the total, while Solana (SOL) followed as the second-highest, with $167 million in inflows. However, multi-asset and Binance Coin (BNB) exchange-traded products (ETP) faced net outflows of $18 million and $1 million, respectively.
Compared to the previous year, 2023 witnessed higher inflows into crypto investment products. Bitcoin funds attracted $388 million in 2022, comprising 47.5% of the $816 million total. Multi-assets followed with $272 million, while Binance Coin experienced an outflow of $24 million.
The trend in crypto investment products turned positive around September 29, coinciding with the beginning of the current bull market. Before that, these products had faced outflows in eight of the previous nine weeks.
A noteworthy aspect is the diverse preferences of investors within the cryptocurrency market, as reflected in the net outflows of $18 million for multi-asset ETPs and $1 million for Binance Coin ETPs.
In parallel with these investment trends, Bitcoin continued its upward trajectory, reaching $45,000 on January 2, marking its highest point since April 2022. The surge in Bitcoin’s price has been driven by ongoing anticipation for the approval of spot Bitcoin exchange-traded funds (ETFs), a development awaited for several months.
The heightened interest in cryptocurrency investment products aligns with broader expectations of a spot Bitcoin ETF approval in the United States. As the crypto community eagerly awaits potential approval from the U.S. Securities and Exchange Commission (SEC) for one or more of the 14 pending applications, Bitcoin surpassed $45,000, a level not seen in almost 20 months.
Despite this, recent market volatility has been evident, with over $460 million in longs liquidated across the crypto market after an 8% drop in Bitcoin’s price amid rumors of a potential SEC delay in approving spot ETFs. Long traders suffered approximately $462 million in losses, and the market movements come amidst reports that the SEC might reject spot Bitcoin ETF applications. The resulting liquidations occurred across major centralized exchanges, with OKX, Binance, and Huobi witnessing the highest share.
Remarkably, Multi-Asset and Binance exchange-traded products (ETP) deviated from the trend, experiencing net outflows of $18 million and $1 million, respectively. The year 2023 outperformed 2022 in terms of higher inflows into digital asset investment products, according to year-to-year data.
While some analysts on the X platform suggest that Bitcoin may not experience a significant rally on the day of an ETF approval due to decreasing implied volatility, optimistic traders, including Scott Melkor, predict potential rises, with Bitcoin forming a “bull pennant” and possibly reaching as high as $54,000 in the days following a potential SEC approval.