By Michael Scott
Money is flowing back into crypto investment funds, with CoinShares reporting spot Bitcoin ETFs breaking the losing streak.
The crypto investment funds witnessed a reversal to end losing steak that saw outflows hit US$1.2 billion. The September 16 report by Jersey-based digital asset manager CoinShares revealed increased attention from investors primarily focusing on the spot Bitcoin exchange-traded funds (ETFs).
CoinShares discloses that crypto investment vehicles registered inflows timely as the US Federal Reserve holds a critical meeting on Tuesday. Notably, Coinshares illustrates that $436 million flowed into funds, exposing investors to cryptocurrencies. The report indicates the bearish spell had investors cash out $1.2 billion, including a $726 million outflow, as witnessed the week before last.
A substantial of the money flowing in the week focused on the newly approved US Bitcoin ETFs, CoinShares disclosed. Leading asset managers, including Fidelity, BlackRock, and Grayscale, have witnessed popular launches since their January 10 approval by the US Securities and Exchange Commission (SEC).
Bitcoin ETFs Rebound in Eve of Fed Rate Cut
The Bitcoin exchange-traded products (ETPs) have seen their wild popularity fade despite taking a billion-dollar investor’s cash. The Monday report acknowledged that ETFs had suffered outflows as the markets remained skeptical about the US central bank policy. Such concern triggered uncertainty on whether to buy or forego the purchase of risk-on assets.
CoinShares attribute the inflow surge witnessed at the end of the week to a dramatic shift in investor sentiment anticipating a potential 50 basis point rate cut. The asset manager observes that optimism stems from rate cuts emerging from comments by former New York Fed president Bill Dudley.
CoinShares acknowledges the Federal Open Market Committee (FOMC) meets on Tuesday, and the strategy adopted for interest rates will be revealed on Wednesday. The markets are pricing the Fed cut to the 23-year high rate that chair Jerome Powell hinted last month it was timely to consider a dovish move.
While investors are optimistic about the cut, it is uncertain how big the cut the Fed will make. In last week’s update, Dudley indicated a likely half-point rate cut. A larger cut increases the likelihood of scaled risk-on assets appeal to investors.
CoinShares spotlights in its report that investment products with Ethereum exposure still confront sizeable challenges. In particular, investors in Ethereum ETPs cashed out $19 million last week.
The Gensler-led Commission approved the issuance of spot Ethereum ETFs to the US investors in May. The Ethereum ETFs have not been as popular as their Bitcoin counterparts since their late July debut.
CoinShares report shows that investors allocated $3.8 million to the Solana-oriented funds. Funds linked to the fifth-largest digital asset by market value saw the fourth consecutive week of positive flows.
The Monday report shows ETFs realized flat trading volumes at $8 billion. Such plunged below the year-to-date average of $14.2 billion.
Canada Bleeds as Fidelity Bitcoin ETFs Top Inflow
A glance at the regional activity shows the US inflows topped all jurisdictions with $416m. Nonetheless, CoinShares reports notable flows within Switzerland and Germany, where funds attracted $27m and $10.6m, respectively.
Canada saw minor outflows of $17.9 million raising its monthly to-date to $45.7 million. Sweden, too, joined Canada bleeding $4.6 million in the week, while Hong Kong witnessed a mild inflow at $0.1 million.
A scrutiny at the individual funds activity reveals Fidelity Wise Origin Bitcoin realized $217.88 million inflow as ARK 21Shares Bitcoin occupied second position at $83.08 million. Bitcoin Bitwise ETF attained $67.27 million to rank third, while ProShares Bitcoin Strategy ETF realized the fourth-largest inflow at $65.81 million.
Grayscale Bitcoin and EthereumTrust shed the largest in the week at $27.2 million and $50.14 million, respectively. Additionally, CoinShares report indicates that Purpose Bitcoin ETF saw investors cash out $21.68 million while Ishare Bitcoin Trust suffered $9.06 million outflow.