Global investments in cryptocurrency hit a high last week, with big names like BlackRock, Fidelity, Grayscale, ProShares, and 21Shares bringing in $1.9 billion in net inflows.
This significant rise came after the Trump administration announced policies showing strong support for digital assets.
With new executive orders and discussions around blockchain technology, it’s clear that the crypto industry is gaining traction in government circles.
Why crypto investments are on the rise
Last week’s surge in crypto fund inflows was led by US-based investment products, which accounted for $1.7 billion of the total.
Other countries also contributed, with Switzerland, Canada, and Germany seeing net inflows of $35 million, $31 million, and $23 million, respectively. According to CoinShares, this widespread activity reflects growing confidence among investors.
This renewed interest comes on the heels of two key actions by President Donald Trump. On Thursday, he signed an executive order to establish the “Presidential Working Group on Digital Asset Markets”.
This group will develop a federal regulatory framework for digital assets, including stablecoins, and propose the creation of a “strategic national digital assets stockpile.”
Earlier in the week, Trump also pardoned Ross Ulbricht, the founder of the Silk Road marketplace, who played a pivotal role in Bitcoin’s early adoption.
These moves have reassured investors and underscored the administration’s willingness to engage with the crypto space.
“The executive orders and pardons have shown that the government is serious about integrating digital assets into the economy”, said the Head of Research at CoinShares, James Butterfill.
Notably, there were no recorded net outflows from global digital asset investment products last week, further highlighting the positive sentiment.
Bitcoin and Ethereum lead the market
Bitcoin ($BTC) continued to dominate cryptocurrency investments, with $1.6 billion in net inflows last week. This brings Bitcoin’s total inflows for the year to $4.4 billion, which represents a staggering 92% of all net inflows in 2024.
US spot Bitcoin exchange-traded funds (ETFs) made a significant contribution, accounting for $1.8 billion of last week’s total.
Ethereum ($ETH) funds also saw a resurgence, attracting $205 million in net inflows. US spot Ethereum ETFs contributed $139.4 million to this figure. Meanwhile, other cryptocurrencies like XRP ($XRP), Solana ($SOL), Chainlink ($LINK), and Polkadot ($DOT) also made gains.
XRP funds added $18.5 million, continuing an inflow streak that has reached over $500 million since November. Solana, Chainlink, and Polkadot funds saw inflows of $6.9 million, $6.6 million, and $2.6 million, respectively.
While these investments surged, the market itself showed little price movement during the week. Trading volumes remained high, totalling $25 billion, which accounted for 37% of activity on trusted crypto exchanges.
However, the market experienced a sharp sell-off on Monday, with Bitcoin’s price dropping below $100,000 after hitting an all-time high of $109,000 on 20 January.
“This sell-off led to $850 million in liquidations, highlighting how volatile the market can be even when institutional interest is growing”, Butterfill explained. As of now, Bitcoin is priced at $99,295, according to The Block’s Bitcoin Price Page.
Musk explores blockchain for government use
In other news, Elon Musk, known for his innovative ideas, is now looking at ways to use blockchain technology in the US government. According to a Bloomberg report, Musk, who oversees the Department of Government Efficiency (DOGE), has begun discussions about how blockchain could improve federal operations.
The potential applications of blockchain include monitoring government spending, securing sensitive data, managing payments, and even overseeing federal buildings. Representatives from DOGE have reportedly met with public blockchain teams to evaluate different technologies.
DOGE was created in November to modernise government systems. Its mission is to upgrade software, improve network infrastructure, and ensure that federal IT systems work together seamlessly.
Musk’s vision is to cut waste, prevent fraud, and save taxpayer money. He has even suggested that federal spending could be reduced by “at least” $2 trillion using these methods.
However, Musk’s leadership has not been without controversy. Vivek Ramaswamy, who was originally appointed to co-lead DOGE, resigned due to disagreements over the department’s direction.
Musk’s ambitious claims about reducing government spending have also raised questions about the feasibility of his plans.
“Blockchain’s ability to provide transparency and efficiency aligns perfectly with DOGE’s goals”, said a source close to the discussions. However, implementing these ideas on a federal level will require overcoming significant challenges.
The challenges of using blockchain in government
While blockchain has the potential to revolutionise public administration, putting it into practice is far from simple.
One of the biggest hurdles is building the infrastructure needed to support blockchain technology on a federal scale. This would require substantial investment, as well as training for government employees to use the new systems.
Regulatory challenges also loom large. For instance, determining who would oversee a decentralised system and ensuring data privacy are major concerns. Without clear guidelines, the adoption of blockchain could face legal and bureaucratic roadblocks.
Another issue is energy consumption. Although newer blockchain technologies are more energy-efficient, many systems still rely on energy-intensive models like Proof of Work. Balancing technological innovation with environmental sustainability will be crucial.
Ethical concerns also need to be addressed. Blockchain is designed to decentralise control, yet its implementation in a government context would require central oversight. This apparent contradiction has raised questions about how such a system would align with democratic principles.
Musk’s dual role as a private innovator and government leader has also sparked debate about the potential for conflicts of interest.
Despite these challenges, the potential benefits of blockchain are hard to ignore. A decentralised system could provide real-time transparency into government spending, helping to build trust between citizens and public institutions. Smart contracts could automate audits, reducing the risk of fraud and corruption.
In an era of political division and public scepticism, blockchain technology could play a key role in restoring faith in government. By giving citizens direct access to information about how public funds are used, it could strengthen accountability and transparency.
The recent surge in crypto investments and Musk’s exploration of blockchain for government use highlight the growing importance of digital assets in both the private and public sectors.
While challenges remain, these developments mark a significant step toward integrating blockchain into everyday life.
