Election Results Add to Growing Investor Push Into Crypto ETFs

Investors have poured nearly $2.5 billion into digital assets exchange-traded funds since the election of Donald Trump, adding to a $5 billion haul cryptocurrency ETFs experienced in October.

With Trump widely seen as a cryptocurrency booster, US exchange-traded funds in Morningstar’s digital assets category received $2.5 billion of new money from investors since the election, more than making up for outflows earlier in the month. This follows on from $5.6 billion in flows in October, the most since March’s $6.2 billion, according to Morningstar Direct. Between March and October, flows into the category slowed down, with it experiencing outflows of $0.1 billion in April, and not rising over $3.3 billion a month in the intervening months.

Those flows were highly concentrated with $1.6 billion of the $2 billion of the category’s November net inflows going to the $39 billion iShares Bitcoin Trust ETF IBIT, which now makes up over a third of the $111 billion assets held by the 85 funds in the category. This mirrors October when the fund received $4.4 billion of that month’s $5.6 billion in net inflows.

Crypto ETFs Draw Investors

In December of 2023, the entire category held just $38 billion across 53, less than just the assets of the iShares Bitcoin Trust ETF alone. The catalyst for the category’s boom was the SEC’s approval of spot bitcoin ETFs on Jan. 11, 2024. Previous bitcoin ETFs tracked the asset’s price using futures, but spot bitcoin ETFs directly held the asset themselves, similar to how the $74 billion SPDR Gold Trust ETF GLD holds physical gold.

While $28.8 billion has flowed into the category so far in 2024, much of the category’s asset growth has come from the soaring price of bitcoin this year, which has risen by 105% year to date.

That cryptocurrency rally has been particularly strong since the election earlier this month. On Nov. 4, the day before the election, bitcoin’s price sat at $67,813, but since the election it’s risen 28% to $86,603. The Trump campaign had been a major booster of cryptocurrency, and Trump also campaigned extensively with Elon Musk, who has also been extremely bullish on cryptocurrencies.

Those gains translated into big returns for crypto ETFs in just the span of a few days. The iShares Bitcoin Trust has gained nearly 30% over the past week, and the Grayscale Ethereum Trust ETF ETHE is up roughly 39%.