Digital asset investment products saw increased institutional interest last week, raising inflows to $882 million in global digital currency flows.

This marks the fourth consecutive week of gains, pushing year-to-date (YTD) inflows to $6.7 billion, approaching the peak of $7.3 billion observed in early February.

Four consecutive weeks of digital currency inflows.

The latest report from CoinShares shows the fourth week of consecutive positive inflows. In the previous week, digital currency inflows reached $2 billion. In the week before that, digital currency inflows totaled $3.4 billion as investors turned to digital assets as a safe haven.

Previously, inflows into digital asset investment products were $146 million, diverging from the trend of XRP.

CoinShares researcher James Butterfill points out that Bitcoin led the increase with $867 million in inflows, reflecting its growing role as an economic hedge amid rising economic uncertainty.

Since the launch of spot Bitcoin exchange-traded funds (ETFs) in the U.S. in January 2024, cumulative net inflows have reached $62.9 billion, surpassing the previous peak of $61.6 billion. While Ethereum has experienced a strong price recovery, investor sentiment remains lukewarm, with inflows of only $1.5 million last week.

On the other hand, Sui stands out among altcoins. It recorded $11.7 million in inflows, surpassing Solana weekly and year-to-date. Now, total inflows for Sui stand at $84 million year-to-date, outpacing Solana's $76 million, although the latter saw outflows of $3.4 million last week.

Crypto inflows last week

CoinShares attributed the sharp rise in digital currency prices and investment inflows to multiple converging macroeconomic trends.

"We believe that the sharp increase in both prices and inflows is due to a combination of factors: a global rise in M2 money supply, inflationary recession risks in the U.S., and several U.S. states recognizing Bitcoin as a strategic reserve asset," wrote Butterfill.

Indeed, states like Arizona and New Hampshire have advanced in their efforts with strategic Bitcoin reserves. However, other states, like Florida, have faced obstacles.

Aggregate changes provide a trading compass for cryptocurrency investors.

In the same vein, the global expansion of M2 money supply has become a focal point for Bitcoin investors. Data on TradingView shows that M2 money supply in China remains at an all-time high according to Trading View. This indicates a potential flood of global liquidity now being absorbed by risky assets like Bitcoin.

Analysts also noted that the price of Bitcoin is positively correlated with global M2 trends. This expectation reinforces the narrative that Bitcoin is an asset responsive to major economic factors.

Bitcoin and M2 Money Supply Chart In the Past Year

However, not all experts are convinced. While there is a growing consensus linking M2 expansion to cryptocurrency price movements, skeptics argue that the relationship may be overstated.

Fears of recession in the U.S. are fueling more cryptocurrency allocations. Goldman Sachs recently raised the likelihood of a recession in the U.S. over the next 12 months to 45%, quietly increasing its exposure to Bitcoin through funds that include spot ETF products.

Investors interpret this as a signal aligning with the broader theme of digital currencies as a hedge against the decline of traditional financial instruments (TradFi) and dollar-denominated assets.

This perception is gaining institutional validation. Standard Chartered recently indicated that Bitcoin is increasingly being positioned as a hedge against treasury market volatility and systemic financial risks. This is particularly relevant with the inflation of U.S. deficits and treasury yields remaining volatile.

The bullish momentum in digital currency inflows, alongside Bitcoin's increasing role in institutional portfolios, indicates that investors are leaning towards digital assets as a directional bet and a macro hedge.$$\u003cc-5/\u003e