Market Pulls $1.2 Billion in Crypto Inflows Amid Dovish Fed Expectations

Digital asset investment products have recorded their third consecutive week of crypto inflows, totaling $1.2 billion, according to the latest CoinShares report. This significant influx of capital is largely attributed to growing investor expectations of a more dovish monetary policy from the U.S. Federal Reserve.

The approval of options for certain U.S.-based investment products has likely contributed to the positive sentiment in the market. However, it’s worth noting that trading volumes have not seen a corresponding increase, with a slight decline of 3.1% week-over-week.

Bitcoin Records Highest Crypto Inflows Across Board, Ethereum Breaks Negative Streak

Bitcoin continued to dominate the inflows, attracting $1 billion in new investments. This substantial inflow also coincided with an $8.8 million increase in short-bitcoin investment products, suggesting some investors are hedging their positions or speculating on potential price corrections.

Ethereum, on the other hand, broke its five-week negative streak with inflows of $87 million. This marks the first significant inflow for Ethereum products since early August, potentially signaling a shift in investor sentiment towards the asset.

The altcoin market showed mixed results. Solana faced outflows of $4.8 million, while Litecoin and XRP saw modest inflows of $2 million and $0.8 million, respectively. Binance Coin and Stacks experienced minor outflows of $1.2 million and $0.9 million.

U.S. Spot Bitcoin ETFs Extend Inflow Streak

In a related development, U.S. spot Bitcoin ETFs have extended their streak of positive flows to eight consecutive days, with $61.3 million in net inflows recorded on Monday. BlackRock’s IBIT led this trend with $72.15 million in new investments, while Fidelity’s FBTC attracted $8.32 million.

However, not all Bitcoin ETFs shared in this success. Ark and 21Shares’ ARKB experienced $9.5 million in net outflows, a stark contrast to its significant inflows of $203.07 million the previous Friday. Bitwise’s BITB also saw outflows of $9.67 million.

Grayscale’s GBTC, which had previously recorded rare inflows of $26.15 million, reported zero flows on Monday, along with seven other spot Bitcoin ETFs.

While Bitcoin products flourished, spot Ethereum ETFs in the U.S. recorded net outflows of $822,290 on Monday, following inflows of $58.65 million the previous Friday.

The Grayscale Ethereum Trust (ETHE) continued to experience outflows, with $11.81 million exiting the fund. However, BlackRock’s ETHA bucked this trend, recording net inflows of $10.99 million and marking its fifth consecutive day of positive flows.

Market Implications and Outlook

These substantial inflows into digital asset investment products, particularly in Bitcoin and Ethereum, suggest a growing institutional interest in the crypto market. The ongoing inflow trend, coupled with the approval of new investment vehicles, may signal a broader acceptance of digital assets in mainstream investment portfolios.