Key Points
- The crypto market saw its second week of consecutive inflows, influenced by the Federal Open Market Committee’s rate cut.
- Bitcoin (BTC) saw the largest weekly inflows while Ethereum (ETH) experienced weekly outflows.
Coinshare’s recent report indicates a second week of positive inflows for the cryptocurrency market.
This trend is partially attributed to the Federal Open Market Committee’s decision to reduce interest rates for the first time since 2020.
Investment Inflows and Outflows
The September 23rd report from Coinshare revealed that cryptocurrency investment products experienced inflows totaling $321 million.
Despite being less than the previous week’s $436 million, the streak of positive inflows remains robust.
James Butterfill, CoinShares’ head of research, suggests that the inflow from the previous week was likely due to the FOMC’s decision to decrease the interest rate by 50 basis points.
Consequently, total assets under management saw a 9% increase, with total investment product volumes rising to $9.5 billion, a 9% increase from the previous week.
The majority of inflows originated from the United States, with $277 million, followed by Switzerland with $63.4 million.
In contrast, European countries like Germany and Sweden, along with Canada and Hong Kong, saw outflows.
Bitcoin and Ethereum Performance
Among the eleven digital assets listed, Bitcoin (BTC) had the most significant weekly inflows of $284 million, leading to inflows into short-bitcoin investments of up to $5.1 million.
On the other hand, Ethereum (ETH) continued its five-week trend of being an outlier with weekly outflows reaching $29 million.
Jean-David Pequignot, Head of Markets at OSL, a Hong Kong-regulated digital asset platform, stated that Bitcoin and other digital assets rallied in response to the FOMC rate cut.
However, he noted that the committee remains wary of further cuts.
Pequignot also mentioned that Governor Bowman favored a smaller cut, while Chair Jerome Powell expressed concerns about being too aggressive with policy loosening.
This situation further highlights the substantial influence traditional monetary policy has on digital assets like cryptocurrency, as rate cuts have historically boosted risky assets.
Pequignot noted, “The US election is fully in play, and the market will pay great attention to economic indicators in the coming months regarding where the Fed fund rate is heading.”