Investment products related to digital assets saw a second consecutive week of inflows last week, with a total of $321 million, as reported by CoinShares.
After the US Federal Reserve’s decision to lower interest rates, cryptocurrency investment products have seen significant inflows.
From September 15 to September 21, digital asset investment products experienced a second consecutive week of inflows, totaling $321 million. This amount is slightly lower than the previous week’s total of $436 million in inflows.
The increase in inflows was likely driven by the Federal Open Market Committee’s decision to reduce interest rates by 50 basis points (bp), according to CoinShares in its latest weekly report on digital asset fund flows released on September 23.
In terms of Bitcoin versus Ethereum products, there were $284 million in inflows for Bitcoin-based investment products and $29 million in outflows for Ethereum-based products.
According to CoinShares, Bitcoin-based investment products were the main focus last week, with $284 million in inflows. The report noted that recent price changes in Bitcoin led to growing inflows into short-Bitcoin investment products, totaling $5.1 million.
On the other hand, Ethereum remained an “outlier,” as Ether-based investment products saw outflows for the fifth consecutive week, totaling $29 million last week, according to CoinShares.
CoinShares’ analysis attributed the repeated outflows in Ethereum to ongoing outflows from the Grayscale Ethereum Trust (ETHE) and insufficient inflows from newly issued exchange-traded funds.
Additionally, CoinShares observed that Solana investment products continued to see small but consistent weekly inflows, amassing $3.2 million last week.
Regarding the impact of the 50 bp rate cut on the markets, the US Federal Reserve announced a 50 bp decrease on September 18, marking the first time the United States reduced borrowing costs since March 2020.
According to CoinShares, the rate cuts have sparked a positive reaction in crypto markets, with total assets under management increasing by 9%. The firm also noted a 9% increase in total investment product volumes from the previous week, reaching $9.5 billion.
While some analysts previously predicted the opposite, Bitcoin investment products showed a positive trend amid the 50 bp reduction.
“However, aggressive rate cuts during recessionary periods typically result in negative market outcomes,” said Bybit and BlockScholes in a joint report on September 18.
BitMEX co-founder Arthur Hayes predicted that markets would collapse immediately after the Fed’s rate cuts, criticizing the central bank for cutting rates amid growing US dollar issuance and increased government spending.
Following the rate cuts, investors have increasingly been buying gold, with the price steadily reaching new all-time highs. Spot gold reached a new record high of $2,629 per ounce on September 23, following a gain of more than 5% over the past two weeks.
According to Bas Kooijman, CEO and asset manager of DHF Capital, the 50 bp rate cut could help extend the uptrend in gold prices, which could continue to reach new records due to additional supporting factors.
