Crypto funds reached an all-time high of $167 billion in assets under management in May, driven by strong inflows as investors hedge against U.S. market uncertainty and diversify global portfolios.
Digital Assets Cement Role in Global Portfolios Amid Shifting Market Sentiment
Assets held in cryptocurrency funds soared to unprecedented levels in May, signalling a notable pivot among global investors seeking diversification and protection from market turbulence. According to data compiled by Morningstar on 294 crypto funds, the sector witnessed net inflows of $7.05 billion last month—the strongest inflow since December—pushing total assets under management to a record $167 billion.
The surge in interest follows easing global trade tensions, which revived risk appetite and drew attention to digital assets as an emerging hedge against traditional market volatility.
“Bitcoin is starting to come into its own again,” said Nicolas Lin, CEO of fintech firm Aether Holdings. “Not just as a high-volatility asset, but as something that more investors are using to hedge their exposure.”
Bitcoin itself has seen robust performance over the last quarter, registering a gain of over 15%. That compares favourably to the 3.6% rise in the MSCI World Index and a 13.3% increase in gold, underscoring the growing appeal of the flagship cryptocurrency.
Nic Puckri, founder and analyst at Coin Bureau, cited growing scepticism surrounding the U.S. economic narrative as a key factor behind bitcoin’s rally.
“The greenback is projected to keep plummeting, bond yields are rising, there’s uncertainty about the equity markets. But bitcoin seems to be holding strong,” said Puckri.
Institutional interest in digital assets has also strengthened considerably following the U.S. regulatory approval of spot bitcoin and ether exchange-traded funds (ETFs), a milestone that has attracted large-scale capital into the crypto space.
While crypto funds thrived, traditional investment vehicles saw notable outflows. According to Lipper data, global equity funds lost $5.9 billion in net assets during May. Meanwhile, gold funds experienced their first monthly outflow in 15 months, shedding $678 million, indicating a broader recalibration of asset allocation strategies.
“I think flows will stay strong, but probably more steady than the rush we saw after the ETFs launched,” Lin noted. “That initial wave was a bit of a release valve. What’s happening now is more important, it’s the start of crypto becoming a permanent fixture in diversified portfolios.”
With momentum building and investor confidence returning, digital currencies appear to be carving out a lasting role in global investment strategies.
