Analysis of the reasons why cryptocurrency investors increased their purchases of Bitcoin-related ET
Cryptocurrency investors have been increasingly buying Bitcoin (BTC)-related exchange-traded products (ETPs) due to concerns that the Federal Reserve may cut interest rates in September.
Cryptocurrency investment company CoinShares reported that digital asset investment products had weekly inflows of $533 million from August 18 to August 24.
The pace of buying cryptocurrency-related ETFs last week hit the highest level in the past five weeks, mainly due to market expectations that the Federal Reserve may make its first interest rate cut in September 2024. Federal Reserve Chairman Jerome Powell said on August 21 that the first rate cut may occur in September 2024.
Among them, Bitcoin-related ETPs had the largest inflows, reaching $543 million. Among them, BlackRock's iShares Bitcoin Trust (IBIT) had the largest inflows, reaching $318 million.
In contrast, Ethereum (ETH)-related cryptocurrency investment products saw outflows of $36 million. Although the newly issued Ethereum ETF product received inflows, the Grayscale Ethereum Trust (ETHE) offset these purchases with an outflow of $118 million.
Despite the outflows from Grayscale Ethereum Trust, the new Ethereum ETF product has attracted a total of $3.1 billion in inflows since its launch on July 23. This inflow offset Grayscale ETHE's $2.5 billion outflow.
Driven by the inflows, the price of Bitcoin also rose by about 8%, from $59,500 on August 18 to $64,300 on August 24. However, compared with the high of $69,900 set on July 29, the price of Bitcoin is still down about 6%.
Although this cryptocurrency inflow hit a 5-week high, it is still far from the historical record. The highest inflow in history was set between March 11 and March 17, 2024, which occurred shortly after the price of Bitcoin hit an all-time high of $73,600 on March 14.
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