The cryptocurrency market has been taken by surprise as a result of a massive $1.8 billion influx into the Bitcoin and Ethereum markets, which has led to a surge in crypto stocks. The pre-market session on March 4 saw a significant rally in stocks such as Coinbase (COIN), MicroStrategy (MSTR), BlackRock iShares Bitcoin Trust (IBIT), and Robinhood (HOOD), among others, thanks to the positive sentiment generated by CoinShares’ latest report.
According to the report, there has been an extraordinary inflow of $1.84 billion into digital asset investment products, making it the second-largest weekly inflow on record. This surge was accompanied by record-breaking trading volumes of over $30 billion for the week. Bitcoin dominated the inflows, accounting for 94% of the total at $1.73 billion, while Ethereum saw a significant uptick with $85 million in inflows, the highest since mid-July 2022. This positive influx seems to have triggered the rally in crypto stocks during the pre-market session.
The United States was the main driving force behind these net inflows, amounting to $1.88 billion. However, this was partly offset by outflows from established entities like Grayscale, which saw $1.46 billion in outflows from its Bitcoin ETF. Nevertheless, new Bitcoin ETF issuers managed to balance this trend by attracting a total of $3.2 billion in inflows. While Bitcoin continued to be the primary focus for investors, Ethereum’s resurgence signaled a renewed interest in alternative cryptocurrencies. The gains in crypto stocks also reflect the growing interest of traders in the digital asset sector.
The release of the report also saw a notable increase in investor interest in crypto stocks, indicating growing optimism. For instance, Coinbase (COIN) surged 6.57%, MicroStrategy (MSTR) rose by 8.58%, BlackRock’s iShares Bitcoin Trust (IBIT) gained 3.42%, and Robinhood (HOOD) saw a 1.93% increase in stock prices during the pre-market session.
However, market responses varied across regions, with Switzerland experiencing inflows of $20 million, while Sweden, Germany, and Canada saw outflows of $32 million, $35 million, and $23 million, respectively. Interestingly, short investors increased their positions by an additional $22 million in short Bitcoin investment products, reflecting a hedging strategy amidst recent price movements.
The influx of funds into Polygon and the outflows from Solana also hinted at shifting investor preferences within the altcoin market. Polygon received $7.6 million in inflows, representing 22% of its Assets under Management (AuM), while Solana saw outflows of $12 million, showcasing the dynamic nature of the cryptocurrency landscape.
The surge in crypto stocks can also be attributed to Bitcoin’s price crossing the $65,000 mark for the first time since November 2021, and Ethereum breaking the $3,500 level on Monday, indicating a bullish sentiment in the market.