Crypto Funds See $407 Million Inflows Amid Political Shifts

Global crypto funds experienced a sharp reversal last week, with net inflows totaling $407 million, following $147 million in outflows the previous week, according to CoinShares. This sudden uptick in investment comes as political developments in the U.S. take center stage, ahead of the presidential election in November. Leading asset managers like BlackRock, Bitwise, Fidelity, and Grayscale all saw positive inflows, signaling renewed investor interest in digital assets.

Political Sentiment Drives Inflows

CoinShares Head of Research James Butterfill attributed the surge in inflows to shifting U.S. political sentiment. “Recent investor decisions have been more influenced by the upcoming U.S. elections than by monetary policy outlooks,” Butterfill explained. He noted that stronger-than-expected economic data had little effect on reversing outflows in prior weeks. However, following the U.S. vice presidential debate and a shift in polling favoring Republicans—who are perceived as more supportive of digital assets—the market saw an immediate boost.

Republican candidate Donald Trump currently leads Democrat Kamala Harris by odds of 54% to 45.4% ahead of the November 5 election, according to decentralized prediction platform Polymarket. Trump’s strong showing in five of six swing states is believed to be contributing to investor optimism, particularly within the crypto market.

U.S. Funds Lead the Surge

U.S.-based crypto investment funds were the biggest beneficiaries of this political momentum, accounting for $406 million of last week’s inflows. Meanwhile, Canadian crypto products saw a modest inflow of $4.8 million, while funds based in other regions experienced net outflows.

Bitcoin (BTC) investment products led the charge, with inflows totaling $419 million for the week, underscoring Bitcoin’s status as a “primary beneficiary of recent political shifts,” according to Butterfill. Bitcoin spot exchange-traded funds (ETFs) in the U.S. played a significant role, contributing $348.5 million in net inflows despite registering daily outflows from Tuesday to Thursday. BlackRock’s IBIT spot Bitcoin ETF was the standout, adding $140.6 million in net inflows. Grayscale’s GBTC product, however, saw $31.5 million in net outflows, likely due to its higher fees compared to newer offerings.

Multi-Asset Products and Ethereum’s Decline

Multi-asset crypto investment products also continued to see modest inflows, marking their 17th consecutive week of positive flows. Last week, these products added $1.5 million. Blockchain equity ETFs saw one of their largest weekly inflows of the year, raking in $34 million, a likely response to the recent Bitcoin price rally.

However, Ethereum (ETH)-based products extended their streak of net outflows, with $9.8 million exiting globally, despite U.S. spot Ethereum ETFs managing to pull in $1.9 million in net inflows. This ongoing outflow trend in Ethereum reflects continued investor uncertainty in the asset despite a generally bullish sentiment across other areas of the crypto market.

As the U.S. presidential election looms, political developments are increasingly shaping investor behavior in the crypto market. With Trump leading in key polls and the Republican party seen as more favorable to digital assets, crypto funds are seeing renewed interest and inflows, particularly in Bitcoin and multi-asset products. However, Ethereum continues to struggle, with persistent outflows despite positive signals in other sectors.