- Bitcoin investment products saw a surge with $533 million in inflows, mainly driven by Jerome Powell’s comments hinting at a potential interest rate cut.
- The U.S. led with $498 million in inflows, while Germany experienced outflows of $9 million.
Bitcoin investment products experienced a significant surge last week, with inflows, following remarks by Federal Reserve Chairman Jerome Powell. Speaking at the Jackson Hole Symposium, Powell hinted at the possibility of the first interest rate cut as early as September.
His comments appeared to fuel optimism among investors, particularly in the digital asset sector, where inflows into Bitcoin rose sharply. According to CoinShares’ Digital Asset Fund Flows Weekly Report, the total inflow into digital asset investment products amounted to $533 million, the highest in five weeks.
Despite lower trading volumes compared to previous weeks, activity remained robust, with $9 billion in trading volumes recorded over the week. This influx of capital was not evenly distributed across regions. The United States dominated, accounting for $498 million of the total inflows, underscoring its leading position in the digital asset market.
Meanwhile, Hong Kong and Switzerland also saw notable investments, with inflows of $16 million and $14 million, respectively. In contrast, Germany recorded outflows amounting to $9 million, making it one of the few countries with net outflows for the year.
Bitcoin’s Sensitivity to Interest Rate Expectations
Bitcoin was the clear beneficiary of Powell’s dovish stance, with the bulk of its $543 million inflows occurring on Friday, directly following Powell’s remarks. This trend highlights Bitcoin’s sensitivity to shifts in interest rate expectations, suggesting that investors view it as a hedge against potential monetary easing.
On the other hand, Ethereum faced a challenging week, with outflows totaling $36 million. However, not all was bleak for the second-largest cryptocurrency by market capitalization. New issuers of Ethereum-related products continued to attract investment, partially balancing the outflows.
The Grayscale Ethereum Trust, in particular, saw substantial outflows of $118 million. Still, a month after the launch of new Ethereum ETFs, these funds have attracted $3.1 billion in inflows, which were partially offset by the Grayscale Trust’s $2.5 billion outflows.
Blockchain equities also saw positive momentum, with inflows for the third consecutive week totaling $4.8 million. This steady flow of capital into blockchain-focused equities suggests a sustained interest in the broader digital asset ecosystem, even amid fluctuating market conditions.
Overall, the most recent CoinShares data shows a very dynamic and quickly reacting digital asset market that is highly influenced by macroeconomic factors and central bank policies. As investors navigate these waters, the interplay between interest rates and digital assets such as Bitcoin will likely remain a key driver of market movements.
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