Crypto Investment Products Experience $921 Million Inflows as Interest Rate Cut Hopes Rise

Crypto Investment Products See $921M Inflows as Rate-Cut Hopes Rise

Digital asset investment products have witnessed an impressive inflow of $921 million over the past week, bouncing back after several periods of volatility.

Key Takeaways:

Digital asset funds attracted $921 million in inflows last week, renewed by positive U.S. inflation data influencing expectations for interest rate cuts.
Bitcoin led this increase with an inflow of $931 million, while Ethereum products experienced their first outflows in five weeks.
Global exchange-traded product (ETP) trading volumes soared to $39 billion, significantly surpassing the yearly average, with strong participation primarily from U.S. and German investors.

This surge in investment comes amidst growing optimism that U.S. interest rates may decrease later this year, following lower-than-expected inflation data, as highlighted in a report by CoinShares released on Monday.

Lower CPI Data Boosts Investor Confidence Amid Strengthening ETP Volumes

Investors' sentiment improved with the release of lower Consumer Price Index (CPI) figures last Friday, despite ongoing concerns related to the U.S. government shutdown, which has hindered the release of critical economic data.

Trading activity remained robust, with ETP volumes reaching $39 billion—far above the weekly average of $28 billion observed earlier this year.

The United States accounted for most of the regional inflows, drawing in $843 million, while Germany recorded one of its largest weekly inflow totals ever at $502 million.

On the other hand, Switzerland reported $359 million in outflows, but these were primarily linked to asset transfers between different providers rather than indicative of active selling behavior.

Bitcoin took the lead in attracting investor interest, noting $931 million in inflows for the week.

Since the Federal Reserve began lowering rates, Bitcoin products have accumulated $9.4 billion in total inflows, bringing the cumulative total for the year to date to $30.2 billion, approaching last year’s record of $41.6 billion.

Meanwhile, Ethereum products experienced $169 million in outflows, marking their first such occurrence in five weeks. Nevertheless, the demand for 2x leveraged Ethereum ETPs remains robust.

Further, Solana and XRP saw reduced inflows of $29.4 million and $84.3 million, respectively, as investors remain cautious while awaiting the anticipated launch of U.S. spot ETFs.

Ethereum ETFs Encounter $244 Million Outflows as Bitcoin Products Regain Momentum

Ethereum exchange-traded funds (ETFs) have recorded their second week of consecutive outflows, reflecting a decrease in investor enthusiasm after months of consistent inflows.

According to data from SoSoValue, the Ether products faced redemptions amounting to $243.9 million for the week ending Friday, following $311 million in outflows the week prior.

Cumulative inflows for all Ethereum ETFs now stand at $14.35 billion, with total assets held at $26.39 billion, representing 5.55% of Ethereum's overall market capitalization.

Outflows on Friday alone totaled $93.6 million, primarily driven by BlackRock’s ETHA ETF, which saw withdrawals totaling $100.99 million.

Conversely, Grayscale’s ETHE and Bitwise’s ETHW recorded minimal inflows, indicating that the shifts in investment are selective rather than a widespread withdrawal from Ethereum assets.

In contrast, spot Bitcoin ETFs saw a resurgence in demand, accumulating $446 million in inflows during the same time frame. Notably, BlackRock’s IBIT and Fidelity’s FBTC were key players in this recovery, contributing $32.68 million and $57.92 million in inflows, respectively.

As a result, total cumulative inflows into Bitcoin ETFs have reached $61.98 billion, with total assets amounting to $149.96 billion, representing 6.78% of Bitcoin's market capitalization.