(Bloomberg) -- The resurgence in digital assets in January looks like it’s finally tempting investors back to the battered world of crypto ETPs.

More than $210 million poured into exchange-traded products that track cryptocurrencies in January, the most since May, according to data tracked by Bloomberg Intelligence. Total assets under management grew 37% during the month to $19.7 billion, also the highest since May of last year, according to CryptoCompare data. 

“It’s pretty impressive actually,” said Athanasios Psarofagis, analyst at Bloomberg Intelligence. “Given how bad the year was last year, to still have inflows, it’s a pretty positive sign for the category.”

Roughly $40 million flowed into the ProShares Bitcoin Strategy ETF (ticker BITO), its best month since June, while the 3iQ CoinShares Bitcoin ETF (BTCQ), listed in Canada, saw an influx of nearly as much. Meanwhile, crypto-centric funds rounded out the top-10 list of the best-performing US equity ETFs year to date — Valkyrie Bitcoin Miners ETF (WGMI) rose roughly 100%, while the VanEck Digital Assets Mining ETF (DAM) added 76%. 

Inflows into Bitcoin-based funds “have far surpassed movements in funds based on other assets,” wrote Noelle Acheson, author of the “Crypto Is Macro Now” newsletter.

Cryptocurrencies have rallied to start the year, buoyed by both optimism that much of the saga around FTX’s downfall is a thing of the past, as well as a rise in other asset classes, including stocks. Bitcoin, the largest token by market value, advanced roughly 40% in January, its best month since October 2021, according to data compiled by Bloomberg.

“Expectations of a less hawkish Federal Reserve, China reopening and receding recession risks in Europe have meant that risk appetite has picked up considerably since Bitcoin hit those November lows,” said Fiona Cincotta, senior financial markets analyst at City Index. “The improved market mood has been reflected in the dramatic Bitcoin rally at the start of 2023.”

Still, given how big crypto’s gains have been over the past month, many say they’re not likely to be sustained — at least not at their current pace. 

For one, markets have been rallying partly on the idea that the Fed could soon pause its interest-rate-hiking campaign, which could help buoy riskier assets, though the central bank has been pushing back on that premise. 

Second, the majority of cryptos are way off their record highs notched during the pandemic, when Bitcoin hit near $69,000 in November of 2021. It’s currently hovering around $23,000, and few, besides the most optimistic of bulls, see it regaining those highs anytime soon. 

“Like all risk assets, the crypto market could be susceptible to further pullbacks should the economic data out over the next few days confuse the consensus take on the Fed easing this year,” said Acheson.

--With assistance from Olga Kharif and Isabelle Lee.

©2023 Bloomberg L.P.