Crypto Products See $921M Inflows As Investors Anticipate Fed Rate Cut This Week
Crypto products saw $921 million in inflows over the past week as investor sentiment improves in anticipation of a potential US Federal Reserve interest rate cut.
That’s as the latest US Consumer Price Index (CPI) came in cooler than expected.
“The lower-than-expected CPI data released on Friday helped restore some confidence that further rate cuts are likely this year,” wrote CoinShares’ head of research James Butterfill in a report today.
Crypto Product Inflows Offset Outflows From Week Before
The inflows seen last week were more than enough to offset the $513 million in outflows that the crypto products experienced the week before.
Most of the inflows came from the US, which saw $843 million added to crypto investment products, the report showed. Germany came in at second with its $502 million inflows during the same period.
Meanwhile, Switzerland posted $359 million in outflows. However, this was mainly due to asset provider transfers and not direct selling activity.
Bitcoin YTD Inflows Still Below 2024 Levels, While ETH Products See Outflows
Bitcoin, which had led the outflows the week before, managed to almost recover these losses with $931 million inflows last week. This has pushed the cumulative inflows for Bitcoin products since the Fed started cutting rates to $9.4 billion, the report said.
Year-to-date (YTD) inflows for the BTC products also stand at $30.2 billion, which is still below the $41.6 billion that was recorded last year.
Crypto product flows by asset (Source: CoinShares)
With regards to products tied to altcoin leader Ethereum (ETH), these products saw outflows for the first time in five weeks after $169 million was withdrawn, CoinShares noted. Other tokens including Sui (SUI) and Cardano (ADA) saw outflows of $8.5 million and $0.3 million, respectively.
Conversely, products for altcoins including Solana (SOL), XRP, Litecoin (LTC) and Chainlink (LINK) all saw inflows last week.
Investor Sentiment Improves As Polymarket Traders See 25 Bps Rate Cut In October
Last week’s inflows coincide with improving investor sentiment in the market, which seems to have recovered slightly after the record liquidation earlier this month.
According to the Crypto Fear & Greed Index, investor sentiment is currently “neutral” at a score of 51/100. This is an eleven-point increase in the past 24 hours. It’s also a 22-point rise from the “fear” reading seen a week ago.
That’s as traders and analysts await the next Fed interest rate cut later this week. The market is confident that there will be a rate cut announced this week. Traders on the decentralized predictions market platform Polymarket are optimistic as well, and see a 98% chance that there will be a 25 basis point (bps) cut.
Contract asking what the Fed’s decision will be in October (Source: Polymarket)
Traders on the platform also see a 1% chance that the Fed will announce a cut as high as 50 bps. However, they see a 1% chance that there will be no change this week as well.
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