Crypto Inflows Surge Following FED Rate Cut, Bitcoin Leads

CoinShares’ latest report reveals a second consecutive week of inflows into crypto investment products, driven in part by the Federal Open Market Committee’s (FOMC) recent decision to lower interest rates for the first time since 2020.

According to the Sept. 23 report, digital asset inflows totaled $321 million. Although slightly down from the previous week’s $436 million, the trend of positive flows remains robust. James Butterfill, CoinShares’ head of research, attributed the inflows to the FOMC’s decision to cut rates by 50 basis points. This policy shift contributed to a 9% increase in assets under management, bringing total investment product volumes to $9.5 billion, a 9% rise from the prior week.

The U.S. led in inflows, contributing $277 million, followed by Switzerland with $63.4 million. However, European countries like Germany and Sweden experienced outflows of $9.5 million and $7.8 million, respectively. Meanwhile, Brazil reported modest inflows of $1.4 million, and Australia saw no trading activity.

Bitcoin (BTC) dominated the market with $284 million in inflows, driving a $5.1 million rise in short-Bitcoin investments. Ethereum (ETH), on the other hand, extended its five-week outflow trend, losing $29 million during the period.

Jean-David Pequignot, Head of Markets at OSL, noted that Bitcoin and other cryptocurrencies rallied following the rate cut. However, he emphasized that the FOMC remains cautious about additional cuts, with policymakers like Chair Jerome Powell expressing concerns about the risks of aggressive policy easing.

The report underscores the strong link between traditional monetary policy and cryptocurrency, as rate cuts typically boost riskier assets. Pequignot added that with the U.S. election approaching, market participants will closely monitor economic indicators to anticipate future moves in the Fed funds rate.

source