Flows into cryptocurrency funds have ramped up in recent months with assets in Bitcoin ETP holdings reaching $158.6bn, according to Morningstar data.
Flows into Ethereum ETPs have also increased in recent months on the back of Trump’s pro-crypto policies and investors’ search for diversification.
Monika Calay, director, manager research at Morningstar, said: “We’ve seen a significant surge in flows into cryptocurrency funds this year, driven by both macro and political tailwinds. The pro-crypto stance of the Trump administration, marked by the launch of the Strategic Bitcoin Reserve, and a broader push to make the US the ‘crypto capital of the world’ has boosted investor confidence.
“At the same time, expectations of future Fed rate cuts and a weakening US dollar are pushing capital toward Bitcoin as a hedge against currency devaluation and inflation.”
Calay added that Bitcoin and other major crypto assets have historically shown low correlation to traditional asset classes such as equities, fixed income, real estate, and gold.
“In an environment where stocks and bonds have become increasingly correlated, cryptocurrency stands out as a diversifier,” she said.
“With Bitcoin now trading near all-time highs and global Bitcoin ETP holdings reaching $158.62bn, demand for crypto investment vehicles continues to build.”
