- Bitcoin funds have surged with $1 billion in inflows following the SEC’s approval of BlackRock’s BTC ETF options.
- Ethereum has also rebounded, attracting $87 million in inflows, marking its first gain since August despite volatile trading conditions.
- The overall assets under management in digital assets have increased by 6.2%, driven by shifts in U.S. monetary policy and robust ETF inflows.
Digital asset investment products saw a significant boost last week, marking the largest inflow in two months. According to CoinShares, investors poured $1.2 Billion into these products.
This boost is driven by optimism for a more lenient U.S. monetary policy in the United States. This positive trend has continued for three consecutive weeks, with US-based funds leading the charge.
Bitcoin funds have seen a remarkable surge, attracting $1 billion in inflows.
Bitcoin-related products saw the largest share of investments, with $1 billion flowing in. This surge was driven by optimism about U.S. monetary policy and regulatory changes.
The U.S. Securities and Exchange Commission (SEC) recently approved physically settled options for BlackRock’s BTC ETF This boosted investor confidence.
Despite the increase in capital inflows, trading activity in digital asset funds dropped by 3.1% during the same week. This suggested that while investor sentiment improved, it didn’t lead to a corresponding rise in trading activities.
Inflows Recovered To $87 Million In Ethereum Funds
Ethereum investment products have been experiencing outflows for the past five weeks. It saw a net inflow of $87 Million. This increase has marked the first positive movement since early August.
This rebound is noteworthy. There were concerns that institutional investors were losing interest in Ethereum due to significant redemptions in recent weeks.
For example, in September, Ethereum ETFs experienced major outflows. It was accompanied by Grayscale’s Ethereum ETF, the largest contributor to these outflows.
However, interest in U.S.-based Ethereum funds surged last week, increasing the total inflows. This represents the highest weekly inflow for Ethereum products in two months.
Varied Sentiment Across Regions and Altcoins
The dynamics varied across regions. While the U.S. and Switzerland saw significant inflows, other regions experienced outflows.
The U.S. attracted $1.17 Billion, and Swiss-based funds saw $84 Million in net new assets, the highest since mid-2022. Australia and Canada saw modest inflows worth $0.6 Million and $1 Million, respectively.
Conversely, Germany-based and Brazil-based funds faced outflows of $20.5 Million and $3 Million, respectively. More regions with outflows included Hong Kong with $1 million outflows and Sweden with $2.5 Million outflows.
This divergence highlights that although global interest in digital assets is growing, market sentiment varies by region.
In the altcoin sector, sentiment was mixed. Solana funds experienced outflows of $4.8 Million, and Binance recorded outflows of $1.2 Million. At the same time, Litecoin and Ripple saw net inflows of $2 Million and $0.8 million, respectively.
These trends indicate that while interest in Bitcoin and Ethereum rebounds, altcoins remain a more volatile asset class.
U.S. Monetary Policy Shapes Market Outlook
The recent surge in inflows is driven by investors’ expectations of a more accommodative stance from the Federal Reserve.
In September, the Fed cut interest rates by 50 basis points, exceeding the anticipated 25 basis points reduction, and further cuts are expected. This shift has led investors to turn to digital assets increasingly.
As a result, the overall assets under management (AUM) in the industry have grown by 6.2%, according to CoinShares.
However, these inflows reflecting rising investor confidence are still relatively new. It remains uncertain how long this trend will persist, especially given the volatility in trading volumes and varying regional attitudes.
With U.S. monetary policy playing a crucial role and a key market driver, digital asset funds may continue attracting interest. This is particularly likely as regulatory advancements, such as introducing more Bitcoin and Ethereum ETFs, come into play.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
