Investors flock to tech stocks and cryptocurrencies, boosting market flows

82

2nd March 2024 – (New York) In a recent report, Bank of America Global Research revealed that investors poured a significant amount of money into technology stocks and cryptocurrencies, signalling growing confidence and a willingness to take on higher-risk assets. Tech stocks, including industry giants such as Apple and Nvidia, saw inflows of $4.7 billion, the highest since August. This surge puts flows on track for an annualized record of $98.8 billion, as reported by BofA, citing EPFR data.

Simultaneously, inflows into cryptocurrencies doubled, reaching $2.4 billion in the latest week compared to $1.2 billion the previous week. The rush of investors into exchange-traded funds contributed to the rise of Bitcoin, which came close to its all-time high of around $69,000. The report from BofA attributes this increased interest in riskier assets to the belief that the U.S. Federal Reserve will continue to cut interest rates throughout the year, coupled with the resilience of the economy.

BofA stated in their report that “Fed cuts are sparking ‘animal spirits’ and a push into riskier assets.” The surge in inflows was also evident in spot Bitcoin exchange-traded funds, which experienced a significant increase in the second half of February. As a result, Bitcoin recorded its strongest monthly gain since December 2020, rising by 45%. Ether, another prominent cryptocurrency, saw its largest monthly increase since mid-2022, surging by 47% and approaching the $3,500 mark.

The popularity of spot Bitcoin ETFs was evident as investors allocated $6.21 billion to the ten largest funds in February, with $4.18 billion invested during the latter half of the month, according to data from LSEG.

However, emerging-market stocks experienced their first outflow since November, with a decline of $1 billion. This was primarily driven by a significant shift of $1.6 billion out of China-exposed funds, marking the largest outflow since October. Despite this, Chinese equities staged a recovery from five-year lows in February, thanks to various stimulus measures implemented by the government to support the struggling economy.