According to CoinShares, digital asset investment products have recorded substantial inflows totaling $932 million this past week, driven largely by speculations of impending interest rate cuts. This marks the second consecutive week of positive flows into the sector with Bitcoin claiming the lion’s share of $942 million, indicating robust investor confidence.
The flurry of activity followed the latest Consumer Price Index (CPI) report, which was lower than expected, stirring the market towards the latter half of the week. The CPI is a key indicator of inflation, impacting traditional financial markets and investor sentiment in the crypto market. While CPI doesn’t directly control crypto prices, high inflation can lead investors to crypto as a hedge, potentially raising its price.
Understanding this relationship helps navigate the crypto market during inflationary times. Remarkably, 89% of the total inflows occurred within the final three trading days showing a reactive surge in investor engagement tied directly to macroeconomic indicators.
The United States dominated the inflow landscape with $1,002 million, signaling strong institutional and retail appetite within the region. Contrarily, Hong Kong and Canada experienced outflows of $83 million and $17 million, respectively, reflecting a cautious stance in these markets amidst global economic uncertainties.
Notably, Grayscale Investments, after a challenging period with $16.6 billion in outflows since January, saw a modest reversal with inflows of $18 million. This suggests a tentative recovery in investor trust or strategic positioning among institutional players.
While Bitcoin shines, Ethereum struggles with continued outflows amounting to $23 million, attributed to ongoing uncertainty over the approval of a spot-based ETF by the SEC. This bearish sentiment casts a shadow over Ethereum’s short-term outlook, even as other altcoins like Solana, Chainlink, and Cardano witnessed inflows of $4.9 million, $3.7 million, and $1.9 million, respectively.
In parallel, Figment and Apex Group have launched the first-ever Ethereum (ETH) and Solana (SOL) staking reward exchange-traded products (ETPs) on the SIX Swiss Exchange in March 2024. This caters to institutional investors seeking staking rewards offered by these proof-of-stake blockchains.
