The last one report Coinshares has announced that investment activity in the cryptocurrency market increased significantly last week, with digital asset investment products seeing the largest inflows in five weeks.
This surge comes at a time when investors are anticipating possible rate cuts by the US Federal Reserve, which could have a significant impact on financial markets, including cryptocurrencies.
Crypto Asset Fund Flow Analysis: Bitcoin Leads the Charge
According to CoinShares’ report, the week of August 18-24 saw a record total inflow of $533 million into digital asset investment products, marking a notable shift in market sentiment.
The majority of these inflows went to Bitcoin-related exchange-traded products (ETPs), accounting for $543 million.
The report found that increased interest in Bitcoin Investments coincided with comments made by Federal Reserve Chairman Jerome Powell at the symposium in Jackson Hole on August 21.
Powell indicated that the first rate cuts could come as early as September 2024, a prospect that has prompted investors to reposition their portfolios in anticipation of a potentially larger Favorable climate for risky assets such as cryptocurrencies.
According to CoinShares, Bitcoin was the single biggest beneficiary of this renewed investor interest, driving the majority of inflows into Bitcoin-related ETPs. BlackRock’s iShares Bitcoin Trust (IBIT) led the way, recording $318 million in inflows during the week.
CoinShares noted in the report:
Interestingly, most of this inflow occurred on Friday, following Jerome Powell’s dove-like comments, indicating how sensitive Bitcoin is to interest rate expectations.
Ethereum Performance in Fund Flows
On the other hand, Ethereum-related investment products did not perform well during the same period. Despite new issuers of Ethereum ETFs continuing to emerge, attract investmentsthere was a net outflow of $36 million from Ethereum-related products.
The Grayscale Ethereum Trust (ETHE) was a major contributor to this trend, with outflows totaling $118 million, offsetting inflows from newer Ethereum ETFs.
Interestingly, new Ethereum ETFs have garnered $3.1 billion in inflows, despite these outflows since their launch on July 23. However, this has been partially offset by the $2.5 billion in outflows from Grayscale’s ETHE.
The CoinShares report also highlighted regional differences in investment flows, with the United States leading the way with $498 million in inflows. Other regions, such as Hong Kong and Switzerland, also saw notable inflows, with $16 million and $14 million, respectively.
Germany, on the other hand, saw a small capital outflow of $9 million, making it one of the few countries with a net capital outflow in the past year.
Main image created with DALL-E, chart from TradingView