Cryptocurrency investment products experienced significant inflows for the second consecutive week, totaling $321 million from Sept. 15 to Sept. 21, as reported by CoinShares. This trend follows the U.S. Federal Reserve’s decision to cut interest rates by 50 basis points (bp), creating a favorable environment for digital assets.
Bitcoin, the world’s leading cryptocurrency, was the primary driver of these inflows, attracting $284 million during the week. The recent price movements in Bitcoin have also sparked increased interest in short-Bitcoin investment products, which saw inflows of $5.1 million. This indicates that traders are positioning themselves for potential future price fluctuations, either hedging against downward movements or betting on Bitcoin’s price correction.
On the other hand, Ethereum continues to struggle. For the fifth consecutive week, Ethereum-based products experienced outflows, totaling $29 million. CoinShares attributes this to ongoing outflows from the Grayscale Ethereum Trust (ETHE) and a lack of substantial inflows from newly launched exchange-traded funds (ETFs) that focus on Ethereum. Despite these outflows, Ethereum remains a key player in the market, though it is underperforming compared to Bitcoin in recent weeks.
Other altcoins, like Solana, saw positive inflows, with Solana-based products attracting $3.2 million. This steady, albeit smaller, inflow highlights that investors are diversifying their portfolios beyond the two largest cryptocurrencies, Bitcoin and Ethereum.
The U.S. Federal Reserve’s decision to lower interest rates was officially announced on Sept. 18. It marked the first time borrowing costs have been reduced since March 2020, during the early days of the COVID-19 pandemic. According to CoinShares, this rate cut helped boost total assets under management (AUM) in the cryptocurrency sector by 9%, with total investment product volumes rising 9% week-on-week to $9.5 billion.
The rate cut has not only benefited crypto markets but also traditional safe-haven assets like gold. The price of gold hit an all-time high of $2,629 per ounce on Sept. 23, driven by a combination of interest rate cuts and ongoing geopolitical tensions.
