CoinShares, Europe’s largest digital asset manager, reports a $436 million inflow into cryptocurrency funds last week, reversing a $1.2 billion outflow from the previous week. Analysts attribute this shift to changing expectations of a larger interest rate cut on September 18, influenced by comments from former New York Fed President Bill Dudley.
Bitcoin Leads Fund Inflows
Bitcoin absorbed the entire $436 million inflow, rebounding after ten days of outflows totaling $1.18 billion. This significant turnaround highlights renewed investor confidence in the leading cryptocurrency. Meanwhile, short Bitcoin funds experienced outflows of $8.5 million following three weeks of inflows, indicating a positive shift in market sentiment.
Ethereum Continues to Face Outflows
In contrast, Ethereum witnessed outflows amounting to $19 million, underscoring ongoing challenges for the second-largest cryptocurrency. Analysts point to profitability concerns with Layer 1 solutions and uncertainties surrounding the upcoming Decun upgrade. Ethereum joins several other crypto assets that experienced negative fund flows during the same period.
Regionally, the United States dominated inflows with $416 million, far surpassing other regions. Switzerland and Germany recorded inflows of $27 million and $10.6 million, respectively. Conversely, Canada saw outflows of $18 million, reflecting a cautious stance in the North American market outside the U.S.
Important Observations
Key takeaways from the recent fund movements include:
- Investors are returning to Bitcoin after significant outflows.
- Ethereum faces continued investor skepticism and outflows.
- The U.S. market leads global crypto fund inflows significantly.
- ETF trading volumes remain low despite positive fund inflows.
Despite these inflows, Exchange-Traded Funds (ETFs) saw trading volumes average $8 billion last week, which is below the year-to-date average of $14.2 billion. This suggests that trading enthusiasm remains muted amid broader market uncertainties, even as interest in crypto funds shows signs of recovery.