Bitcoin and XRP Lead Significant Recovery Amidst Market Volatility
By: Isha Das
In a week marked by substantial market volatility, crypto exchange-traded products (ETPs) have recorded a fourth straight week of inflows, drawing in an impressive $527 million, as reported by CoinShares. The market fluctuations have been driven by broader economic concerns, notably the performance of DeepSeek, a Chinese AI company whose open-source model notably outperformed OpenAI's ChatGPT. This development spurred initial outflows early in the week as investors reacted to the potential impact on major U.S. tech firms.
Amid such volatility, Bitcoin emerged as a resilient favorite among investors, while XRP continued its strong performance trajectory. A recovery phase observed mid-week saw inflows surpassing $1 billion, aligning with the year’s broader trend of $44 billion inflows into crypto ETPs. James Butterfill, a head researcher at CoinShares, highlighted that the recent market correction was anticipated following a prolonged rally earlier in 2024. He noted that spot Bitcoin ETFs have significantly nurtured investor interest, with notable inflows into Bitcoin investment products. The United States played a leading role in these financial movements, recording $474 million last week and amassing a substantial $5 billion year-to-date (YTD).
BlackRock's IBIT greatly benefited from this upturn, with $918 million in inflows, though this was partly offset by outflows from major issuers like Fidelity, Grayscale, and Bitwise, jointly accounting for $465 million in losses. The interest in Bitcoin mirrored a parallel rise in short-Bitcoin products coverage, marking a consistent inflow trend. XRP has surfaced as a robust contender among altcoins, with $15 million flowing in last week and reaching $105 million in YTD inflows. Ripple's quarterly report indicates increased on-chain activity and institutional interest, spurred by burgeoning optimism about regulatory frameworks following the presidential election win by a pro-crypto candidate. Meanwhile, Ethereum faced a challenging landscape, indicating neutral net flows influenced by broader technology sector concerns, as noted by Butterfill.
Interestingly, geopolitical airwaves resonated with similar market dynamics as U.S. President Donald Trump announced a delay on planned tariffs against Mexico, mitigating the earlier slide in cryptocurrency values. This move mirrored positive investor sentiment which had backed Bitcoin and other major coins' rebound measures amidst trade uncertainties. Investors' attraction to blockchain equities has also been noticeable, bagging $160 million in YTD inflows, emphasizing the market's proclivity to view these dips as lucrative buying opportunities.
