Crypto ETFs Attract $917 Million Ahead of U.S. Elections

As the U.S. presidential elections approach, investors are significantly increasing their investments in cryptocurrency exchange-traded funds (ETFs), with a notable surge in funds tracking the spot price of bitcoin. The anticipated volatility during election week has not hindered these fund inflows.

On Wednesday, ETFs following bitcoin's spot price recorded a net inflow of $917.2 million, marking the largest single-day gain since March. The largest spot bitcoin fund in terms of assets under management, BlackRock's iShares Bitcoin Trust ETF, attracted a net inflow of $872 million, representing the largest single-day amount since the fund's inception in January.

This increase in investments coincides with a rise in bitcoin's value, as the cryptocurrency saw approximately a 12% increase in October. This rise is partly attributed to the possibility of Donald Trump, viewed as a pro-crypto candidate, being elected president for a second time. Analysts at Ryze Labs note that the potential for an increased Republican majority in Congress post-election is raising hopes for crypto-friendly legislation.

While the race between Trump and Democrat Kamala Harris currently appears very close and polls indicate a competitive environment, betting platforms suggest that Trump's chances of victory are significantly higher.

In preparation for the expected fluctuations, futures markets indicate that investors are bracing for a volatile election week. Data from cryptocurrency derivatives exchange Deribit suggest that bitcoin's price could experience daily movements of approximately 3.7% in either direction until November 8.

Activity levels in the cryptocurrency derivatives market have reached new peaks, with open positions on these exchanges hitting a record $43.61 billion on Tuesday. According to Deribit CEO Luuk Strijers, as traders prepare for short-term volatility, they anticipate that bitcoin's price will maintain an upward trend after the election week concludes.