Crypto Investment Products Surge Amidst Inflation Data Reversal

Cryptocurrency investment products saw a notable rebound in investor interest last week, driven by optimism fueled by unexpectedly low U.S. inflation data. According to CoinShares, exchange-traded products (ETPs) experienced $921 million in inflows, reversing the previous week’s $513 million outflows, as per reports on Monday. This positive trend was largely attributed to renewed expectations for potential U.S. interest rate cuts following the unexpectedly low Consumer Price Index (CPI) data released Friday. James Butterfill, CoinShares’ Head of Research, noted that the ongoing U.S. government shutdown has created uncertainty regarding future monetary policy direction. However, the CPI data rekindled optimism around further interest rate reductions. Bitcoin (BTC), leading the inflows with nearly $931 million in inflows, recovered from last week’s losses, while Ethereum (ETH) experienced outflows for the first time in five weeks, totaling $169 million, with consistent daily outflows throughout the week. Despite this, 2x leveraged ETPs remain popular, according to Butterfill. Other altcoin ETPs like Solana (SOL) and XRP (XRP), saw a slowdown in inflows ahead of anticipated U.S. exchange-traded fund (ETF) launches, with $29.4 million and $84.3 million inflows respectively. Notably, Solana ETP inflows decreased by more than 81% compared to the previous week. Bitcoin’s $931 million inflow last week brought total inflows since September’s U.S. Federal Reserve rate cuts to $9.4 billion. Despite the recent surge in inflows, Bitcoin funds’ year-to-date total stands at $30.2 billion, representing a 38% decrease compared to last year’s $41.6 billion. Overall, crypto funds under management reached $229 billion, with $48.9 billion in inflows so far this year.