The global digital asset investment market has rebounded significantly recently, indicating a strong recovery for cryptocurrency-based funds. According to Coin SharesGlobal cryptocurrency investment products generated net inflows of $321 million last week.
This comes after two weeks of outflows, indicating a shift in investor sentiment as macroeconomic conditions, such as the US Federal Reserve’s recent decision to cut interest rates, play a major role in the direction of the crypto market.
Bitcoin and Solana lead the flow wave
As CoinShares report reveals, Bitcoin-based investment products continue to dominate the market, accounting for most of the inflows last week.
CoinShares shows that Bitcoin products alone saw net inflows of $284 million. This represents a significant shift in momentum for the leading cryptocurrency, which has consistently outperformed other digital assets in attracting institutional investment.
Interestingly, short-term Bitcoin products — those that profit from a decline in the price of Bitcoin — also saw modest inflows of $5.1 million, indicating that some investors are still cautious, hedging against potential volatility.
Solana-based funds have also been prominent in recent weeks, with the asset seeing net inflows of $3.2 million last week, according to CoinShares.
However, while Bitcoin and Solana enjoyed positive momentum, Ethereum-based investment products saw another week of net outflows.
A CoinShares report shows that Ethereum funds saw outflows of $29 million last week alone, extending their losing streak to a fifth straight week. This brings the total outflows of Ethereum funds to $187.7 million during the period.
What about regional flows?
Regionally, the US remains the dominant player in the global cryptocurrency investment market, with US-based funds bringing in $277 million in net inflows.
Switzerland followed with the largest weekly inflows of $63 million, while countries like Germany, Sweden and Canada also experienced net outflows, showing a more mixed picture of global crypto investment.
It is worth noting that the rally we have seen in both Bitcoin and Solana, as revealed by James Butterfill, head of research at CoinShares, was largely driven by a shift in US monetary policy, particularly the “more dovish stance” of the Federal Open Market Committee (FOMC) and a 50 basis point rate cut.
This monetary easing has created a favorable environment for risky assets, including cryptocurrencies, encouraging increased global flows into digital asset products.
So far, the positive inflows that Bitcoin has received have been reflected in its market performance, with Bitcoin now trading back above the psychological level of $60,000. In particular, at the time of writing, Bitcoin is trading at $62,775, down slightly by 1.1% in the past day.
This surge in price performance has also boosted Bitcoin’s market cap from under $1.15 trillion last week to now over $1.25 trillion.
Featured image created using DALL-E, chart from TradingView