A recent report by Coinshares revealed that global investments in cryptocurrencies saw a notable uptick, with $436 million in net inflows recorded last week, primarily fueled by Bitcoin’s comeback. This marks a positive turn after experiencing two weeks of net outflows.
Key asset management firms such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares contributed to this revival, showing a renewed interest in crypto investments.
Analyzing The Fund Movements
Leading the charge, Bitcoin-focused funds attracted $436 million in net inflows, rebounding from a 10-day stretch of outflows totaling $1.2 billion.
This change indicates a significant shift in investor confidence towards Bitcoin, especially in the US. U.S.-based spot Bitcoin ETFs accounted for a large chunk of the inflows, with $403.9 million recorded in net weekly inflows.
European markets also experienced positive developments, as Switzerland and Germany’s funds registered net inflows of $27 million and $10.6 million, respectively. However, Canadian markets did not follow suit, with products there encountering net outflows of $18 million.
In contrast, short Bitcoin investment products, following three weeks of inflows, reported net outflows of $8.5 million. This trend may reveal a shift in investment tactics as confidence in the market slowly returns.
Moreover, Solana investment products have remained in the spotlight with $3.8 million in net inflows for the fourth week running, showing a rising interest in cryptocurrencies beyond Bitcoin.
Factors Behind The Upsurge and Challenges
CoinShares’ Head of Research, James Butterfill, attributed this market turnaround to shifting expectations around possible interest rate reductions.
Butterfill commented:
We think the inflow surge near the end of the week resulted from a significant expectation shift regarding a potential 50 basis point interest rate cut set for September 18th, influenced by remarks from former NY FED President Bill Dudley.
Nonetheless, despite this positive recovery, trading activity across crypto investment products remained stagnant at $8 billion for the week, which is considerably lower than the average of $14.2 billion for 2024.
Additionally, while Bitcoin funds fueled the rebound, Ethereum funds faced ongoing challenges, suffering another week of net outflows, highlighting varying sentiments among investors in the crypto landscape.
The CoinShares report indicated that last week brought $19 million in net outflows from Ethereum funds, compounding the previous week’s total of $98 million in negative flows.
Featured image created with DALL-E, Chart from TradingView
