Crypto investment products saw significant inflows of $1.2 billion last week, marking the highest inflows in 10 weeks. Bitcoin led the surge with over $1 billion, while Ethereum broke its five-week losing streak. Discover the factors driving this massive growth and the impact this has on the U.S. interest rate outlook.

• Crypto investment products led an astonishing inflow of $1.2 billion last week, which set the record for the highest weekly total since July, extending a three-week streak of positive inflows driven by U.S. interest rate cuts.

• Bitcoin products alone accounted for over $1 billion in inflows, reflecting strong institutional interest, especially with the approval of physically settled options tied to BlackRock’s U.S. Bitcoin ETF.

• After a five-week losing streak, Ethereum gained $87 million in inflows, signaling a renewed confidence in Ethereum's long-term potential.

Source: Coin360 

The global crypto market cap has declined to $2.13 trillion, down by 1.37% in the past 24 hours. Trading volume also saw a decrease of 20.45%, totaling $91.53 billion. DeFi accounts for $5.36 billion of this volume, while stablecoins make up 91.45%, amounting to $83.7 billion. Bitcoin’s dominance increased slightly to 56.82%. 

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Market leader Bitcoin has faced considerable volatility in the wake of rising geopolitical tensions, slipping down under $61,000 but bouncing back above this key level at the time of writing. Notwithstanding the risk-off sentiment weighing on the king crypto, other leading projects have etched out small gains and are trending the market: TRON Network posted a record high revenue of $577 million in Q3 2024, bringing reason to cheer for TRX investors, while Hamster Kombat price sees a small bounce as the sell-offs following the airdrop ease. Meanwhile, EigenLayer’s newly unlocked token following the airdrop has seen considerable selling pressure, driving double-digit losses for the EIGEN crypto. 

Last week saw a major shift in the digital asset landscape with crypto investment products raking in a staggering $1.2 billion in net inflows. This marked the largest single-week inflow since mid-July, continuing a three week streak of positive market sentiment. The surge in investment was largely attributed to growing optimism around potential interest-rate cuts in the U.S. as investors shifted their portfolios in anticipation of a more favorable economic environment.

U.S. based funds dominated the inflows, accounting for $1.17 billion of the total. The return of investor confidence is a clear indication that crypto remains resilient, despite ongoing volatility in global markets. The approval of new investment products and the anticipation of economic policy changes have bolstered market sentiment, creating an ample environment for inflows.

Crypto Assets Fund Flows (Source: CoinShares)

Bitcoin products led the way with over $1 billion in inflows, reaffirming its position as the top choice for crypto investors. The approval of physically settled options tied to BlackRock’s U.S. bitcoin ETF (IBIT), the largest spot Bitcoin fund by assets, was a key factor in driving these inflows. With regulatory approvals continuing to shape the market, Bitcoin's status as the premier digital asset has only strengthened.

Interestingly, while the approval of new options boosted market sentiment, trading volumes did not see a comparable increase, declining slightly by 3.1% week-over-week. Despite this, Bitcoin remains the go-to asset for institutions and retail investors alike, particularly in the U.S. market.

Read More: Best Spot Bitcoin ETFs to Buy in 2024

Ethereum products also experienced a notable turnaround, attracting $87 million in net inflows after five consecutive weeks of losses. This marked the first measurable inflows for Ethereum since early August, signaling renewed investor confidence in Ethereum's long-term potential. The timing aligns with growing discussions around Ethereum’s scalability and the ecosystem's development, including advancements in staking and Layer 2 solutions.

Ethereum’s ability to attract capital after a difficult period is significant, suggesting that investors are regaining faith in the asset as both a store of value and a functional blockchain for decentralized applications.

Crypto Assets Weekly Flow (Source: CoinShares)

The above image shows that Bitcoin's recent surge to around $65,000 prompted an inflow of $8.8 million into short-Bitcoin products, as some investors anticipated a possible decline following the rally. Regional sentiment, however, varied significantly. The U.S. led with a substantial $1.2 billion in inflows, while Switzerland followed with $84 million. In contrast, Germany and Brazil saw outflows, with $21 million and $3 million, respectively, indicating mixed investor sentiment across global markets.

Read more: Best Ethereum ETFs to Watch in 2024

A major driver behind the recent inflows was the U.S. regulatory landscape. The approval of physically settled options for U.S.-based investment products, particularly tied to BlackRock's Bitcoin ETF, had a significant psychological impact on the market. While trading volumes did not spike as much as anticipated, the inflows indicate growing confidence in regulated crypto products, particularly in the U.S.

This regulatory backing is essential as it provides a sense of security for institutional investors who might have been hesitant to dive into the crypto space due to regulatory uncertainty. With clearer rules emerging and new products receiving approval, crypto is poised to capture an even larger share of the traditional investment market.

It's a clear indication that investor sentiment is turning bullish. In fact, massive inflows of $1.2 billion into crypto investment products have been recorded. The crypto market seems to get back to momentum, led by Bitcoin and followed by Ethereum. Anticipation of rate cuts in the U.S. and regulatory approvals for new products in the near term will likely keep driving inflows higher.

Large-cap digital assets signaled mixed performances: Litecoin had inflows of USD 2 million, XRP had USD 0.8 million inflows, while Solana lost USD 4.8 million. This indeed shows positive investor interest in the first two assets. However, with Solana losing $4.8 million, this perhaps indicates mixed market sentiment whereby some large-cap altcoins are attracting capital while others-like Solana-are witnessing reduced investor confidence.

As always, the cryptocurrency market is very volatile, but the trend now suggests a growing confidence in digital assets as a viable avenue of investment. Again, Bitcoin and Ethereum are casting themselves as safe havens during times of uncertainty, with this perhaps just the beginning of yet another memorable rally.