The impact of interest rate cuts on the Crypto market: $321 million inflow

According to CoinShares’ latest weekly report, digital asset investment products saw inflows for the second week in a row this month, with investors pouring $321 million into the sector.

The influx of investors helped increase the total assets under management (AuM) of Crypto asset ETPs by 9% to $85.8 billion. Total trading volume for investment products also rose to around $9.5 billion.

CoinShares head of research James Butterfill linked the positive trend to the Federal Reserve’s recent decision to cut interest rates by 50 basis points.

“This surge was likely driven by comments from the Federal Open Market Committee (FOMC) last Wednesday, which took a more dovish stance than expected, including a 50 basis point rate cut,” he explained.

A breakdown of flows shows that BTC-based investment products led inflows, generating $284 million in net gains globally last week.

Notably, major Crypto asset funds from firms such as BlackRock, Bitwise, Fidelity, ProShares, and 21Shares contributed to the rally, with a combined net inflow of $321 million.

BTC’s positive price momentum also attracted bearish BTC investors, who poured $5.1 million into funds that shorted BTC.

Ethereum faced outflows for the fifth week in a row, totaling $29 million. The trend stems from continued withdrawals from Grayscale’s ETHE product and a decline in interest in new products.

According to Farside data, ETHE saw outflows of between $13 million and $18 million for three consecutive days last week, overshadowing small inflows from other products, including Grayscale's mini trust.

Meanwhile, Solana maintained its current positive trend, adding $3.2 million in inflows last week.

This inflow is also related to the announcement of several traditional financial institutions during the recent Solana Breakpoint event in Singapore that they plan to launch financial services on the network.

Other large-cap alternative assets, including XRP and LTC, saw combined inflows of $300,000.

Among regions, the United States was unsurprisingly the main contributor to inflows last week, accounting for $277 million, followed by Switzerland at $63 million.

In contrast, Germany, Sweden, and Canada saw outflows of $9.5 million, $7.8 million, and $2.3 million, respectively.