Investors pile $1bn into crypto exchange-traded products amid ETF euphoria

Digital asset investment products lured some $293 million last week, sending inflows surging past the $1 billion mark this year, CoinShares found.

And real world assets are the buzzword again as MakerDAO eyes opportunities in credit market.

Let’s get into it

Euphoria surrounding potential approval of a Bitcoin spot exchange traded fund in the US has seen inflows for digital asset investment products surge past the $250 million mark for the third straight week.

Ethereum has been a recent beneficiary.

Ethereum saw its largest inflows since August 2022 of $49 million, “with the last two weeks signifying a real turnaround in sentiment,” CoinShares said in a report.

At some $44 billion, total assets under management in crypto is now the highest since a raft of fund collapses in May 2022, the firm said.

Tokenisation boom

Meanwhile, MakerDAO may soon be eager to start tokenising private credit and collateralised loan obligations.

That’s a potentially massive opportunity. The private credit market is worth $1.5 trillion.

Allan Pedersen, CEO of asset manager Monetalis Group told DL News that the protocol could chase double-digit yields in those markets.

Monetalis manages Maker’s liquid bond strategy, and its vault is worth around $1.2 billion.

Maker has experience tokenising real-world assets.

There’s a wave of optimism about broad-based tokenisation — tracking and trading digital representations of assets on blockchains — of assets like US government bonds.

Banks see tokenisation as a shortcut to automating complicated trading processes.

And in the current interest rate environment, investment firms like Franklin Templeton see high demand for US Treasuries, which are offering risk-free 5% yields.

At the same time, regulators are helping.

The European Union, for instance, has a sandbox where banks, asset managers, and others can experiment with tokenisation without falling foul of regulation.

Pedersen predicted that real-world asset investment will move fully on-chain as soon as the next six months.

Private credit and CLOs won’t be as quick — it will be at least another year before those assets are fully tokenised, he said.

Crypto market movers

• Bitcoin is down 1.2% in the last 24 hours, reaching $36,736.
• Ethereum rose by 1.8% in the same period, at $2,089.

What we’re reading

• The best crypto tax software of 2023 — Milk Road
• FOMO is back in the stock market as investors see a Santa rally — Wall Street Journal
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