Crypto products see surge in inflows fueled by FED rate cut

According to Coinshare’s latest report, the cryptocurrency market experienced an inflow for the second week in a row, influenced by the Federal Open Market Committee’s decision to cut interest rates for the first time since 2020.

In Coinshare’s September 23 research report, crypto investment products saw inflows of $321 million. While this figure is down from the previous week’s $436 million recovery, the streak of positive flows remains strong.

According to CoinShares Head of Research James Butterfill, the reason for last week’s inflow was likely due to the FOMC’s decision to cut interest rates by 50 basis points on Wednesday.

“As a result, total assets under management grew by 9%. Total investment product volumes were $9.5 billion, up 9% from the previous week.”

Butter filling.

The report states that the majority of inflows came from the United States with $277 million, followed by Switzerland with $63.4 million.

Brazil saw modest inflows of $1.4 million and Australia saw no trading activity at all, offset by outflows from European countries such as Germany and Sweden of $9.5 million and $7.8 million respectively. Canada also saw outflows of $2.3 million, followed by Hong Kong with $1.3 million.

Of the eleven digital assets listed, Bitcoin (BTC) saw the largest weekly inflows of $284 million, spurring short bitcoin inflows of up to $5.1 million. Meanwhile, Ethereum (ETH) continues its five-week outlier streak with weekly outflows reaching $29 million.

Jean-David Pequignot, Head of Markets at OSL, a Hong Kong-regulated digital asset platform, told crypto.news that Bitcoin and other crypto assets rose in response to the FOMC rate cut. However, he noted that “the committee remains cautious about further cuts.”

Pequignot also noted that Governor Bowman favored a smaller cut, while Chairman Jerome Powell expressed concern that policy easing was being too aggressive.

This fact further highlights the significant impact of traditional monetary policy on digital assets like cryptocurrencies, as interest rate cuts have historically boosted riskier assets.

“The US elections are in full swing and the market will pay close attention to economic indicators of where the Fed funds rate is headed in the coming months.”

Pequignot.