In an exciting turn of events, Bitcoin has rebounded significantly with $436 million in inflows, while Ethereum stumbles, according to the latest report from CoinShares. This marks a return to positive inflows after two consecutive weeks of net outflows, showcasing a renewed investor interest in Bitcoin over Ethereum and other cryptocurrencies.
The rebound was driven by major asset managers such as BlackRock, Bitwise, Fidelity, Grayscale, ProShares, and 21Shares, reflecting a broader shift in the crypto investment landscape.
Understanding Fund Flows
Leading this surge, Bitcoin-based funds saw $436 million in net inflows, a significant recovery following a 10-day streak of outflows totaling $1.2 billion. This indicates that confidence in Bitcoin is particularly strong in the US market, where spot Bitcoin ETFs accounted for a major share with $403.9 million in net weekly inflows.
European markets also contributed positively with Swiss and German-based funds showing net inflows of $27 million and $10.6 million, respectively. However, not all regions reflected this positive trend; for instance, Canada-based products faced net outflows of $18 million.
Interestingly, investment products focusing on Solana also saw net inflows of $3.8 million, marking the fourth consecutive week of gains for the cryptocurrency alternative to Bitcoin.
Key Factors Behind Bitcoin’s Rebound
James Butterfill, the Head of Research at CoinShares, attributes this positive market shift to changing expectations regarding interest rate cuts. Commenting on the surge, Butterfill highlighted:
We believe the surge in inflows towards the end of the week was driven by a significant shift in market expectations for a potential 50 basis point interest rate cut on September 18th, following comments from former NY FED President Bill Dudley.
Despite the rebound, overall trading volume across crypto investment products remained flat at $8 billion, which is still lower than the 2024 average of $14.2 billion.
Evident Challenges for Ethereum-based Funds
While Bitcoin thrived with substantial inflows, Ethereum-based funds continued to struggle, reflecting differing investor sentiments in the crypto market. CoinShares reports that Ethereum funds saw net outflows of $19 million last week, adding to the significant $98 million in outflows from the previous week.
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