According to data from CoinShares, cryptocurrency investment products have seen a significant reversal, with inflows of $436 million following weeks of outflows totaling $1.2 billion. This marks the first major influx in weeks, driven by shifting market sentiment regarding an expected interest rate cut.
Market Reaction to Potential Interest Rate Cuts
The inflows occurred largely due to growing speculation about a potential 50 basis point interest rate cut on September 18. CoinShares’ head of research, James Butterfill, noted that comments from former New York Fed President Bill Dudley contributed to the shift in sentiment, encouraging investors to return to the market.
Regional Inflows and Trading Volumes
Despite the inflow surge, trading volumes in exchange-traded funds remained steady at $8 billion, still below the year-to-date average of $14.2 billion. The U.S. led the way, accounting for $416 million of the inflows, followed by Switzerland and Germany, which contributed $27 million and $10.6 million, respectively.
Bitcoin Sees Strong Inflows While Ethereum Faces Challenges
Bitcoin was the primary beneficiary of this trend, reversing a 10-day streak of outflows amounting to $1.18 billion with $436 million in new inflows. On the other hand, short-Bitcoin products saw $8.5 million in outflows after three weeks of inflows.
In contrast, Ethereum continues to face challenges, recording $19 million in outflows. This was mainly due to concerns over the profitability of layer-1 networks following the Dencun upgrade. Meanwhile, Solana recorded its fourth consecutive week of inflows, totaling $3.8 million.
Boost in Blockchain Equities and New ETF Launches
Blockchain equities also saw a positive trend, with $105 million in inflows, largely attributed to the launch of several new ETFs in the U.S. These developments highlight the ongoing interest in blockchain-related products despite fluctuations in individual cryptocurrencies.
Recent Declines in Bitcoin Exchange Activity
The recent inflows follow a period of sharp declines in Bitcoin exchange activity. Earlier in September, daily Bitcoin inflows fell by 68%, from 68,470 BTC to 21,742 BTC, while outflows dropped 65%, from 65,847 BTC to 22,802 BTC. These declines marked a low point for Bitcoin activity before the recent surge in inflows.
