Crypto Inflows Surge $578M Amid 401(k) Crypto Asset Integration
Crypto Markets Recover, Recording $578 Million in Inflows
After a slow start to the week, crypto markets rebounded strongly, posting inflows of $578 million. This reverses the trend from the week ending August 2nd, which saw inflows of only $223 million. While Ethereum previously led the charge, Bitcoin is rapidly gaining ground.
The shift in sentiment appears linked to recent moves regarding the inclusion of crypto assets in US 401(k) retirement plans.
The Impact on Crypto Flows
The week began with outflows, driven by negative US economic data. However, the approval of crypto assets in 401(k)s triggered a sharp reversal.
“After early-week outflows of US$1 billion on weak US payroll data, inflows rebounded to $1.57 billion following the government’s 401(k) crypto approval, bringing net weekly inflows to $578 million,” CoinShares reported.
James Butterfill, Head of Research at CoinShares, noted that crypto markets saw $1.57 billion in positive flows in the latter half of the week following the 401(k) announcement.
However, trading volumes in crypto ETFs remain down 23% from the previous month, a likely consequence of the summer slowdown.
Bitcoin Closes the Gap With Ethereum
Ethereum has dominated crypto inflows in recent weeks, fueled by an altcoin rally. However, Bitcoin is catching up. Ethereum-related inflows reached $269.8 million, while Bitcoin followed closely with $265 million.
This marks a considerable change from the previous week, which saw $133.9 million in inflows to Ethereum and $404 million in outflows from Bitcoin investment products.
“Bitcoin saw a recovery following two consecutive weeks of outflows,” Butterfill stated.
Samson Mow, CEO of Jan3, suggests that many ETH holders initially acquired Bitcoin during ICOs. He believes these investors are converting BTC to ETH to push the price up, capitalizing on the Ethereum Treasury narrative.
Mow predicts these investors will shift their funds back to Bitcoin if Ethereum's price reaches a certain threshold. This aligns with sentiments from Bitcoin pioneer Davinci Jeremie, who advises investors to hold onto their Bitcoin.