Crypto ETFs record $533 million of net inflows as possibility of rate cut boosts investor confidence
|- Digital asset products witnessed $533 million in inflows last week after Jerome Powell hinted at rate cut in September.
- Bitcoin saw $543 million in inflows as investors began flocking in on Friday.
- Ethereum experienced further outflows last week, with other altcoins seeing little or no inflows.
Crypto ETFs recorded the highest inflows in five weeks after Jerome Powell hinted at the possibility of the Federal Reserve’s (Fed) cutting interest rates in September during his speech at the Jackson Hole Symposium. Meanwhile, the altcoin investment market witnessed little or no inflows with Ethereum ETFs seeing outflows totaling $35.7 million last week.
Digital asset investment products see renewed investor interest following $543 million of inflows
Crypto ETFs recorded $533 million in net inflows last week, according to CoinShares' weekly report. This is the highest inflow among crypto ETFs in five weeks, as the crypto market witnessed another week of recovery from the market drawdown on August 5.
Crypto ETF Flows
The increased inflows were largely influenced by Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday, in which he suggested that the time has come for the Feds to lower interest rates if economic data aligns.
The US remained dominant regionally, with inflows totaling $498 million, followed by Hong Kong with $15.9 million in inflows. Switzerland also recorded inflows last week, totaling $13.9 million after a previous week of outflows. Brazil was just a little behind with $8 million in inflows. However, German investors continued to shed their holdings, posting $8.9 million in outflows last week.
Asset-wise, Bitcoin ETFs were majorly responsible for the net inflows, witnessing $543 million of positive last week. The surge in inflows suggests Bitcoin's high sensitivity to the possibility of interest rate cuts, as nearly 50% of the flows came following Powell's speech on Friday. This is also evident in Bitcoin's price, which experienced a 7% rally to $64K on Friday.
Meanwhile, altcoins witnessed negative flows last week, with global Ethereum ETFs recording net outflows totaling $35.7 million.
According to CoinShares, Ethereum ETFs have recorded $3.1 billion in inflows since the launch of the US spot ETH ETFs, but this has largely been offset by heavy negative flows from Grayscale Ethereum Trust (ETHE), which has seen $2.5 billion in outflows.
Crypto ETF FAQs
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
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