Crypto funds see major inflows in January amid token surge

The resurgence of digital assets in January looks set to finally lure investors back into the ailing world of crypto ETPs.

According to data from Bloomberg Intelligence, more than $210 million ($294 million) flowed into exchange-traded products that track cryptocurrencies in January, the most since May. According to CryptoCompare data, total assets under management rose 37 percent over the month to $19.7 billion, also the highest since May last year.

“It’s actually quite impressive,” said Bloomberg Intelligence analyst Athanasios Psarofagis. “Considering how bad it was last year, it’s a pretty positive sign for the category to still have inflows.”

Around $40 million flowed into ProShares Bitcoin Strategy ETF (ticker BITO), its best month since June, while Canada-listed 3iQ CoinShares Bitcoin ETF (BTCQ) saw almost as much inflow. Meanwhile, crypto-centric funds rounded out the top 10 list of best-performing U.S. stock ETFs year to date — the Valkyrie Bitcoin Miners ETF (WGMI) is up about 100 percent, while the VanEck Digital Assets Mining ETF (DAM) is up 76 percent increased cent.

Flows into Bitcoin-based funds “have far outpaced movements into funds based on other assets,” wrote Noelle Acheson, author of the Crypto is now macro Newsletter.

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Cryptocurrencies rallied earlier in the year, buoyed by optimism that much of the saga surrounding FTX’s demise is over and a surge in other asset classes, including equities. Bitcoin, the largest token by market value, rose about 40 percent in January, its best month since October 2021, according to data compiled by Bloomberg.

“Expectations of a less restrictive Federal Reserve, a reopening of China and easing recessionary risks in Europe have caused risk appetite to increase significantly since bitcoin hit those lows in November,” said Fiona Cincotta, senior financial markets analyst at City Index. “The improved market sentiment was reflected in the dramatic Bitcoin rally in early 2023.”

However, given crypto’s big gains over the past month, many say they likely won’t last — at least not at their current pace.