Latest a report Coinshares revealed that the cryptocurrency market saw a significant increase in investment activity last week, with digital asset investment products seeing their largest inflows in five weeks.
This rise comes at a time when investors are anticipating possible interest rate cuts by the US Federal Reserve, which could significantly impact financial markets, including cryptocurrencies.
Crypto Fund Flow Analysis: Bitcoin Leads the Charge
According to a report from CoinShares, the week from August 18 to August 24 saw record inflows into digital asset investment products of $533 million, indicating a significant shift in market sentiment.
Most of these flows were directed towards Bitcoin-related exchange-traded products (ETPs), which amounted to $543 million.
The report revealed that the increased interest in Bitcoin investments coincided with comments made by Federal Reserve Chairman Jerome Powell during the Jackson Hole Symposium on August 21.
Powell has indicated that the first rate cuts could occur as early as September 2024, a possibility that has prompted investors to reposition their portfolios in anticipation of a more favorable environment for risky assets such as cryptocurrencies.
According to CoinShares, Bitcoin alone has emerged as the main beneficiary of this renewed investor interest, with the bulk of inflows directed to Bitcoin-linked exchange-traded funds (ETFs). BlackRock’s iShares Bitcoin Trust (IBIT) topped the list, with $318 million in inflows during the week.
CoinShares noted in the report:
Interestingly, the majority of these flows came on Friday, in the wake of dovish comments from Jerome Powell, indicating Bitcoin’s sensitivity to interest rate expectations.
Ethereum’s performance in fund flows
On the other hand, Ethereum-related investment products did not perform well during the same period. Although new issuers of Ethereum-related ETFs continued to attract investment, there were net outflows of $36 million from Ethereum-related products.
The Grayscale Ethereum Trust (ETHE) was a major contributor to this trend, with total outflows of $118 million, offsetting the inflows seen by more recent Ethereum ETFs.
Interestingly, the new Ethereum ETF has garnered $3.1 billion in inflows despite these outflows since its launch on July 23. However, this has been partially offset by $2.5 billion in outflows from Grayscale’s ETHE.
The CoinShares report also highlighted regional differences in investment flows, with the United States topping the list with $498 million in inflows. Other regions, such as Hong Kong and Switzerland, also saw notable inflows, with $16 million and $14 million, respectively.
In contrast, Germany saw a small outflow of $9 million, making it one of the few countries to see net outflows during the year.
Featured image created using DALL-E, chart from TradingView