Digital Asset Investment Products See Inflows of $932 Million in Response to CPI Report

Digital asset investment products experienced substantial inflows totaling $932 million for the second week.

The inflows were an immediate reaction to the lower-than-expected Consumer Price Index (CPI) report released on Wednesday, CoinShares said in a Monday report. 

The report detailed that the latter three trading days of the week accounted for 89% of the total flows, indicating a clear correlation between Bitcoin prices and interest rate expectations.

Despite the increase in inflows, trading volumes remained relatively low at $10.5 billion for the week, compared to $40 billion in March.

US Dominates Regional Inflows in Digital Asset Products

The United States dominated the regional inflows, with $1.002 billion entering the market last week.

Interestingly, Grayscale, which had experienced significant outflows of $16.6 billion since the launch of the ETF in January, saw minor inflows totaling $18 million for the first time.

Switzerland and Germany also witnessed minor inflows of $27 million and $4.2 million, respectively.

However, Hong Kong and Canada experienced outflows amounting to $83 million and $17 million, respectively.

According to CoinShares, digital asset investment products received as much as $932 million in inflows last week, mainly due to market expectations of interest rate cuts. Bitcoin inflows were $942 million. Ethereum outflows were $23 million. https://t.co/qOxsPMz0oY

— Wu Blockchain (@WuBlockchain) May 20, 2024

Bitcoin attracted $942 million in inflows, while there were virtually no flows into short Bitcoin, indicating a positive outlook among investors.

Several altcoins also received notable inflows, with Solana, Chainlink, and Cardano leading the way with $4.9 million, $3.7 million, and $1.9 million, respectively.

On the other hand, Ethereum continued to face bearish sentiment due to uncertainties surrounding the Securities and Exchange Commission’s (SEC) approval of a spot-based ETF, resulting in further outflows of $23 million.

In contrast, blockchain equities experienced ongoing outflows, with only six out of the 20 weeks this year witnessing inflows.

Year-to-date, these equities have seen a total outflow of $512 million, suggesting a cautious approach from investors in this sector.

Demand for Spot Bitcoin ETFs Picks Up Again

Bitcoin ended the week on a positive note, closing at around $66,300, representing a 7.8% increase compared to the previous week’s closing value of approximately $61,500.

The week saw relatively low volatility, with the majority of the price surge occurring on Wednesday, while the rest of the week remained stable.

A significant factor contributing to last week’s upward price movement was the renewed demand for BTC Spot ETFs, Matteo Greco, a research analyst at digital asset investment firm Fineqia International, said in a recent note.

After experiencing five weeks of low demand, resulting in around $1 billion in cumulative net outflows, BTC Spot ETFs witnessed approximately $950 million in net inflows.

Grayscale’s ETF (GBTC), which transitioned from a trust to an ETF in January 2024, saw its first weekly net inflow.

Trading volume for Bitcoin ETFs remained stable, with a cumulative trading volume of $262.6 billion since inception and recording $8.6 billion during the week.

These figures maintain consistency with recent weeks, as daily trading volume ranged from $1.5 to $2 billion, following a period of exceptionally high trading activity in February and March.