According to the latest report from CoinShares, the global market for crypto investment products has experienced a remarkable rebound. Last week alone saw net inflows of $436 million, primarily driven by Bitcoin’s resurgence. This marks a significant turnaround following two consecutive weeks of net outflows.
Major asset managers such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares have seen a positive shift, signaling renewed interest in crypto investment products.
Detailing The Fund Flows
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Bitcoin-based funds led this resurgence, generating $436 million in net inflows after a 10-day streak of outflows totaling $1.2 billion. This marks a robust reversal in investor sentiment towards Bitcoin, particularly in the US market. Notably, spot Bitcoin exchange-traded funds (ETFs) in the United States contributed significantly to this influx, accounting for $403.9 million in net weekly inflows.
European markets have also shown positive trends. Switzerland and Germany-based funds recorded net inflows of $27 million and $10.6 million, respectively. However, the trend was not uniform across all regions, as Canada-based products experienced net outflows of $18 million.
After three consecutive weeks of inflows, short Bitcoin investment products saw a reversal, registering net outflows of $8.5 million. This could suggest a shift in investor strategies, with confidence returning to the market. Additionally, Solana investment products witnessed net inflows of $3.8 million for the fourth consecutive week, indicating growing interest in alternative cryptocurrencies beyond Bitcoin.
Reason Behind The Rebound And The Catch
As highlighted by James Butterfill, CoinShares Head of Research, the shift in market sentiment can be attributed to changing expectations regarding potential interest rate cuts. Butterfill noted:
We believe the surge in inflows towards the end of the week was driven by a significant shift in market expectations for a potential 50 basis point interest rate cut on September 18th, following comments from former NY FED President Bill Dudley.
Despite this recovery, trading volumes across crypto investment products remained flat at $8 billion for the week, which is considerably lower than the 2024 average of $14.2 billion.
While Bitcoin-based funds have driven the recent rebound, Ethereum-based funds continue to face challenges. The past week saw net outflows of $19 million from Ethereum funds, adding to the $98 million in negative flows reported the previous week. This divergence in fund flows highlights differing investor sentiments within the crypto market.
The global digital currency market cap value, as observed on the one-day chart, further underscores the current dynamics in the crypto investment landscape.
