In recent weeks, the digital asset market has experienced a significant surge in bullish activity, resulting in the prices of most cryptocurrencies reaching levels not seen in over 18 months. This remarkable upward trend in asset prices is accompanied by the rapid growth of decentralized finance (DeFi), with investors eagerly seeking to maximize their returns before the end of the year. A market report from on-chain analytics firm CCData reveals that Assets Under Management (AUM) in virtual asset products, weekly inflows, and interest in a spot Bitcoin (BTC) ETF have all witnessed substantial growth. Institutional clients’ interest in DeFi products has maintained momentum, as evidenced by a 14% increase to $43.3 billion by the end of November, surpassing the $45 billion mark at present.
Last week, digital asset investment products recorded $176 million in inflows, extending the positive streak to ten consecutive weeks. The overall AUM in crypto assets has experienced a year-to-date growth of 120%. However, it is important to note that despite the current bullish drive, the market is still below its all-time high in 2021 when the AUM surpassed $74 billion. An intriguing finding from this research is the daily average trading volume, which increased by a significant 35.3% from the previous month, reaching $481 million. The bull run in 2021 initially propelled the market, but it was hindered by rapid inflation in traditional markets. These unfavorable conditions resulted in tightening measures, prompting investors to withdraw from risky assets and causing low trader sentiment due to industry collapses.
On-chain data indicates a significant increase in AUM towards the end of the second quarter when spot Bitcoin ETF applications started emerging and decentralized applications (DApps) experienced a surge in volume. The report suggests that this uptick in AUM can be attributed to several factors, including growing investor confidence, heightened anticipation for a spot BTC ETF, increased participation in the ETF process, and pressure on the Securities and Exchange Commission (SEC). Notably, various firms involved in the ETF process, such as Fidelity, WisdomTree, BlackRock, and Grayscale, engaged with the financial regulator last month to either amend filings or discuss future prospects and seek feedback from the Commission. Although the SEC has yet to approve any spot Bitcoin ETF applications due to concerns about possible market manipulation, many wealth managers are positioning themselves for an imminent approval, anticipating the beginning of a new liquidity cycle.
Bitcoin continues to play a vital role in the rise of AUM, remaining at the forefront in terms of investment product inflows. Its value has surged by 160% this year, with the cryptocurrency currently trading at over $44,000. Investment products linked to Bitcoin generated a 12% increase in November, reaching a total of slightly over $31.8 billion. Ethereum (ETH) products also experienced a surge last month, recovering from previous losses. The leading altcoin products grew by 12% to reach $1.75 billion. Additionally, Solana (SOL)-based products exhibited exceptional growth of 99%, pushing its AUM to $424 million.
The digital asset market has witnessed a remarkable growth trend, both in terms of asset prices and the increasing popularity of decentralized finance. The rise in AUM reflects growing confidence from institutional clients, as well as the anticipation surrounding the potential approval of a spot Bitcoin ETF. While challenges remain, such as concerns about market manipulation and regulatory approval, the market seems poised for further expansion, driven by the positive momentum and investor enthusiasm. As we approach the end of the year, it will be interesting to see how these trends continue to unfold and shape the future of the digital asset market.