The Latest report Coinshares has revealed that the cryptocurrency market saw a significant augment in investment activity last week, with digital asset investment products seeing their biggest inflow in five weeks.
The augment comes amid investor expectations of an interest rate cut by the US Federal Reserve, which could have a significant impact on financial markets, including cryptocurrencies.
Crypto Asset Fund Flow Analysis: Bitcoin Leads the Pack
According to a report by CoinShares, during the week of August 18-24, digital asset investment products saw a record inflow of funds worth a total of $533 million, marking a clear change in market sentiment.
The majority of these inflows were directed into Bitcoin exchange-traded products (ETPs), which accounted for $543 million.
The report revealed that the surge in interest in Bitcoin investments coincided with comments made by Federal Reserve Chairman Jerome Powell during a symposium in Jackson Hole on August 21.
Powell has suggested that the first interest rate cuts could come as early as September 2024, prompting investors to reposition their portfolios in anticipation of a potentially more favorable environment for risk assets such as cryptocurrencies.
Bitcoin itself has been a major beneficiary of this renewed investor interest, according to CoinShares, with the majority of inflows being directed into Bitcoin-related ETPs. BlackRock’s iShares Bitcoin Trust (IBIT) led the pack, recording $318 million in inflows over the week.
CoinShares noted in the report:
Interestingly, most of these inflows occurred on Friday, following 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 have not performed well during the same period. Although up-to-date Ethereum ETF issuers continue to attract investment, there was a net outflow of $36 million from Ethereum-related products.
Grayscale Ethereum Trust (ETHE) was a significant contributor to this trend, with total outflows of $118 million, which offset the inflows seen in newer Ethereum-based ETFs.
Interestingly, up-to-date Ethereum-based ETFs have accumulated $3.1 billion in inflows despite outflows since their launch on July 23. However, this was partially offset by $2.5 billion in outflows from Grayscale’s ETHE fund.
The CoinShares report also highlighted regional differences in investment flows, with the United States leading the way with $498 million inflows. Other regions such as Hong Kong and Switzerland also saw significant inflows, at $16 million and $14 million, respectively.
Germany, in turn, recorded a compact outflow of funds of $9 million, making it one of the few countries with a net outflow this year.
Featured image created with DALL-E, chart from TradingView
