Bitcoin (BTC) ETPs See Largest Inflows in 5 Weeks as Investors Anticipate Rate Cuts by the Fed

The latest report from Coinshares has revealed that the cryptocurrency market witnessed a significant increase in investment activity last week.

Cryptocurrency investment products witnessed their largest inflows in five weeks during the last week of August, as revealed by the latest report from Coinshares.

This surge comes amid anticipation among investors regarding potential interest rate cuts by the United States Federal Reserve, a factor that could significantly influence the financial markets, including cryptocurrencies.

CoinShares reports that digital asset investment products saw inflows totaling $533 million during the week of August 18 to August 24, marking a substantial shift in market sentiment.

The majority of these inflows were directed towards Bitcoin-related exchange-traded products (ETPs), which amounted to $543 million.

According to the report, the increasing interest in Bitcoin investments coincided with comments made by Federal Reserve Chair Jerome Powell during the Jackson Hole Symposium on August 21.

Powell's remarks indicated that the first interest rate cuts could occur as early as September 2024, a prospect that has led investors to reposition their portfolios in anticipation of a potentially more favorable environment for risk assets like cryptocurrencies.

As highlighted by CoinShares, Bitcoin alone emerged as the primary beneficiary of this renewed investor interest, funneling the bulk of inflows into Bitcoin-related ETPs.

Among these, BlackRock’s iShares Bitcoin Trust (IBIT) recorded the highest inflows, totaling $318 million for the week.

"Interestingly, the majority of those inflows were on Friday, following the dovish comments from Jerome Powell, indicating Bitcoin’s sensitivity to interest rate expectations," the report stated.

Meanwhile, Ethereum-related investment products did not perform as well during the same period. Despite new issuers of Ethereum ETFs continuing to attract investments, there were net outflows of $36 million from Ethereum-related products.

The Grayscale Ethereum Trust (ETHE) was a major contributor to this trend, with outflows totaling $118 million, offsetting the inflows seen in newer Ethereum ETFs.

However, the new Ethereum ETFs have managed to accumulate $3.1 billion in inflows since their launch on July 23, according to CoinShares.

This is despite the outflows from Grayscale's ETHE, which amount to $2.5 billion.

The CoinShares report also touched upon regional differences in investment flows, with the United States leading the way with $498 million in inflows. Other regions, such as Hong Kong and Switzerland, also saw substantial inflows, with $16 million and $14 million, respectively.

On the other hand, Germany experienced minor outflows amounting to $9 million, making it one of the few countries with net outflows for the year.

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