Cryptocurrency investment products, particularly those related to Bitcoin, saw their largest inflows in five weeks, as investors increasingly turned to Bitcoin-related exchange-traded products (ETPs). This surge comes amid expectations of potential interest rate cuts by the U.S. Federal Reserve in September 2024.
Significant Inflows in Crypto Investment Products
From August 18 to August 24, digital asset investment products experienced weekly inflows totaling $533 million, according to a report by CoinShares on August 26. This marks the highest level of investment activity in the last five weeks, driven largely by speculation surrounding impending rate cuts. On August 21, Federal Reserve Chair Jerome Powell hinted that the first interest rate cuts could happen as soon as September 2024.
Bitcoin Dominates Inflows
Among various crypto investment products, Bitcoin-related ETPs stood out, attracting $543 million in inflows during the week. The most significant contribution came from BlackRock’s iShares Bitcoin Trust (IBIT), which saw $318 million in new investments. This surge in Bitcoin investment helped push the cryptocurrency’s price up by 8%, rising from $59,500 on August 18 to $64,300 on August 24.
Ethereum Experiences Outflows
In contrast to Bitcoin’s strong performance, Ether-related investment products saw outflows totaling $36 million during the same period. Despite new Ethereum ETF issuers continuing to attract investments, the Grayscale Ethereum Trust (ETHE) experienced significant withdrawals, with $118 million in outflows, offsetting the gains made by new entrants in the market.
Ethereum ETFs Face Mixed Results
Since the launch of new Ethereum ETFs on July 23, they have collectively garnered $3.1 billion in inflows. However, these gains were partly neutralized by the Grayscale Ethereum Trust, which shed $2.5 billion over the same period.
Bitcoin’s Price Performance Amid Increased Inflows
The influx of capital into Bitcoin-related products played a key role in boosting the cryptocurrency’s value, which climbed by 8% within a week. However, despite this short-term gain, Bitcoin remains down approximately 6% over the past 30 days, after peaking at $69,900 on July 29, according to data from CoinGecko.
Future Outlook and Market Analysis
While last week’s inflows exceeded $500 million, they fell short of the year’s record. The largest inflows in 2024 occurred between March 11 and March 17, shortly after Bitcoin reached its all-time high of $73,600 on March 14.
Matrixport, a crypto financial services platform, attributes the recent Bitcoin surge to the active minting of new stablecoins like Tether. In its latest update on August 26, Matrixport noted, “Robust stablecoin minting is the main force behind Bitcoin’s rise, suggesting institutional influence surpasses macroeconomic factors.”
