FameEX Hot Topics | Bitcoin Drives $321M Crypto Inflows Following Fed Rate Cut

Cryptocurrency investment products have experienced significant inflows following the U.S. Federal Reserve's recent interest rate cut, according to data from crypto investment firm CoinShares. Digital asset investment products saw inflows totaling $321 million between September 15 and 21, marking the second consecutive week of inflows. While this figure is slightly lower than the $436 million reported in the previous week, it still reflects strong investor interest.

CoinShares attributes this surge to the Federal Open Market Committee's (FOMC) decision to reduce interest rates by 50 basis points (bp). In their latest weekly digital asset fund flows report, released on September 23, CoinShares noted that Bitcoin based investment products were the primary beneficiaries, receiving $284 million in inflows. Additionally, there was a noticeable increase in short Bitcoin investment products, which saw inflows of $5.1 million, driven by recent fluctuations in Bitcoin's price.

The Federal Reserve officially announced the FOMC's 50 bp rate cut on September 18, marking the first time borrowing costs have been reduced since March 2020, when the Fed responded to the COVID-19 pandemic. This move has created a positive ripple effect in the crypto markets, as reported by CoinShares, leading to a 9% increase in total assets under management across digital investment products. Furthermore, total investment product volumes rose by 9% from the previous week, reaching a notable $9.5 billion.

Bas Kooijman, CEO and asset manager of DHF Capital, commented on the implications of the 50 bp rate cut, suggesting that it could further drive the uptrend in gold prices, which are already on track to reach new highs due to various supporting factors. He remarked, "The decision acts as a start to the interest rate cut cycle that markets have been waiting for a long time now and could fuel appetite for assets like gold and others." Kooijman also indicated that the scale of the rate cut could lead to more aggressive actions in the coming months, stating, "The Federal Reserve’s dot plot shows a steeper decline in interest rates than previously forecast by the central bank. This trajectory could further cement gains in gold prices."

In summary, the Fed's rate cut has spurred optimism in both the cryptocurrency and traditional financial markets, suggesting potential growth for investment products linked to Bitcoin and other digital assets in the near future.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.