Crypto investment products had a peak in inflows in the middle of the month

While inflows into digital asset investment products totaled $30 million last week, such offerings attracted $343 million the week before, according to CoinShares — the highest since November 2021.

The figures emerged in a CoinShares report published on Sunday. The company reported inflows of $12 million for the week ended July 15, but corrected that in its latest report to $343 million due to “late reporting of trades.”

CoinShares head of research James Butterfill told Blockworks that the inflows came mainly from a smaller firm in Switzerland, but did not disclose the product issuer.

“While it was only the provider that saw the majority of the flows, we saw smaller inflows across most other funds, rather than outflows, suggesting better sentiment,” he said.

Overall, bitcoin and ether products enjoyed each inflow, with bitcoin and ether products bringing in net new assets of $206 million and $120 million, respectively.

This marked the highest single week of inflows for bitcoin investment products since May. For ether, this was the largest weekly inflow since June 2021, ending an 11-week streak of outflows.

Although bitcoin products have seen inflows of $241 million so far this year, according to CoinShares, ether products — despite the recent surge in assets — have leaked $316 million so far in 2022, CoinShares data shows.

The Ethereum Mainnet is set to merge with the Beacon Chain proof-of-stake system in the coming months, marking the end of proof-of-work for Ethereum. The merger sets the stage for future scaling upgrades, including sharding, and is set to reduce Ethereum’s energy consumption by approximately 99.9%, the blockchain states on its website.

Butterfill said the outflow of ether products for much of the year was likely due to uncertainty about when this would occur.

“These recent inflows — and price action — suggest investors are becoming increasingly comfortable with the proposed merger,” Butterfill said.

The merger is scheduled to take place at the end of the year, with such upgrades on a few public test networks before they are moved to the main network.

Ether’s price was around $1,480 at 3:30 p.m. ET, up nearly 21% in the past month and up about 27% from two weeks ago. Overall, the asset’s price has fallen around 70% from its record high in November last year.

Avi Felman, head of digital asset trading at GoldenTree Asset Management, said flows into retail investment products tend to follow price jumps, rather than leading them.

Still, he added that he believes the market is closely watching the Ethereum merger, and that the change to proof-of-stake will drive the asset’s outperformance.

“But this is relative to the crypto market,” Felman told Blockworks. “There’s no telling what the macro environment holds and I don’t think the inflows due to The Merge will be able to hold Ethereum up against the dollar if stocks are trading poorly.”