Last week, crypto investments surged to $2.2 billion inflows. That is a serious boost for the sector, driven by the results of the U.S. elections and Federal Reserve policy changes.
That puts the year-to-date inflow at a record $33.5 billion. Meanwhile, total AuM reached an all-time high of $138 billion earlier this week, reflecting increased confidence in the market.
Bitcoin Leads, But Profit-Taking Emerges
Bitcoin attracted the majority of inflows, raking in $1.48 billion. However, its recent price spike to record levels triggered profit-taking, with $866 million in outflows recorded later in the week. Despite this, short Bitcoin products saw $49 million in inflows, hinting at cautious hedging by some investors.
Ethereum also made a strong comeback, recording $646 million in inflows. This rebound followed weeks of outflows and is tied to renewed optimism around its upcoming upgrades and broader pro-crypto sentiment fueled by the election results.
Political Shifts Boost Crypto Sentiment
The Republican Party’s sweep in the House and Senate has been a game-changer for the crypto market. Data from Stand With Crypto reveals that 274 pro-crypto candidates won House seats, with 20 securing Senate positions. In contrast, anti-crypto lawmakers saw much smaller gains, with only 134 elected across both chambers.
This shift is expected to pave the way for clearer crypto regulations, bolstering investor confidence. Former President Donald Trump’s continued support for crypto-friendly policies has further fueled optimism.
Fed Policy Adds Liquidity to Markets
The Federal Reserve’s recent interest rate cuts have injected liquidity into the economy, encouraging risk-taking in markets like crypto. Analysts note that such monetary easing often benefits digital assets, making them more attractive to investors.
Cautious Optimism Ahead
While inflows and price surges reflect growing interest, the profit-taking trend highlights lingering caution among investors. Analysts suggest that upcoming regulatory decisions and Federal Reserve policies will shape the market’s next moves.
