In recent weeks, the digital asset market has experienced a significant surge in bullish activity, with the prices of most cryptocurrencies reaching levels not seen in over 18 months. Alongside the rise in asset prices, decentralized finance (DeFi) activities have also seen substantial growth in terms of volumes and staking, as investors aim to maximize their rewards before the year’s end.
According to a market report from on-chain analytics firm CCData, there has been a notable increase in Assets Under Management (AUM) in virtual asset products. The report highlights a 14% rise in institutional clients’ interest in DeFi products, reaching $43.3 billion at the end of November. At the time of writing, the figure has surpassed $45 billion, indicating a continuously growing market.
Digital asset investment products have experienced a positive run with $176 million in inflows last week, marking the tenth consecutive week of growth. This surge in inflows has resulted in a year-to-date growth (YTD) of 120% in crypto assets AUM. However, it is important to note that the current bullish drive still falls below the all-time high of 2021 when AUM surpassed $74 billion.
The market report also highlights a significant increase in the daily average trading volume, climbing 35.3% from the previous month to $481 million. This rise in trading volume can be attributed to various factors, including growing investor confidence, increased anticipation for a spot Bitcoin (BTC) Exchange-Traded Fund (ETF), a higher number of participants in the ETF process, and mounting pressure on the Securities and Exchange Commission (SEC).
The report suggests that the uptick in AUM is primarily driven by the prospects of a spot Bitcoin ETF. As spot Bitcoin ETF applications began to take shape and decentralized applications (DApps) volume surged, there was a noticeable increase in AUM towards the end of the second quarter. Many firms involved in the ETF process, such as Fidelity, WisdomTree, BlackRock, and Grayscale, have made strategic moves by meeting with the financial regulator to discuss prospects and receive feedback. While the SEC is yet to approve any spot Bitcoin ETF applications due to concerns of possible market manipulation, wealth managers are positioning themselves for an imminent approval, anticipating a new liquidity cycle in the market.
Bitcoin remains at the forefront of investment product inflows, as the market leader has seen a significant increase in value. With a growth rate of 160% this year, Bitcoin is currently trading at over $44,000, and its investment products recorded a 12% growth in November, standing slightly above $31.8 billion. Ethereum (ETH) products also experienced a surge last month, recovering from previous losses. The leading altcoin products, including Solana (SOL) based products, witnessed a spike of 99%, pushing its AUM to $424 million.
The digital asset market has been experiencing remarkable growth in recent weeks, with soaring asset prices and increased activities in the DeFi space. The rise in AUM, trading volume, and institutional interest in DeFi products indicate a progressively expanding market. The prospects of a spot Bitcoin ETF and industry developments further contribute to the positive outlook of the digital asset funds market. While uncertainties and regulatory concerns still exist, the growing confidence and anticipation in the market suggest that it may be paving the way for a new liquidity cycle and continued growth in the coming months.
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