Key Takeaway:
- Cryptocurrency market experienced second consecutive week of inflows due to Federal Open Market Committee’s interest rate cut.
- Crypto investment products saw $321 million inflows, majority coming from the United States.
- Bitcoin had largest weekly inflows of $284 million, while Ethereum had outflows reaching $29 million.
- Market reacted positively to FOMC rate cut, but concerns remain about further cuts and policy decisions.
Positive Inflows Due to FOMC Decision
CoinShare’s latest report reveals that the crypto market saw its second consecutive week of inflows, driven in part by the Federal Open Market Committee’s decision to cut interest rates for the first time since 2020. The report shows that crypto investment products received inflows totaling $321 million, with the majority of the funds coming from the United States.
Bitcoin Leads Weekly Inflows
Out of the eleven digital assets listed, Bitcoin emerged as the top performer with the largest weekly inflows of $284 million. This surge in Bitcoin investment also led to increased inflows into short-bitcoin investments, totaling $5.1 million. However, Ethereum continued its trend of being an outlier, with weekly outflows reaching $29 million. Market experts believe that the positive reaction to the FOMC rate cut reflects the significant influence traditional monetary policy has on digital assets like cryptocurrency.
Market Reacts to FOMC Decision
Following the FOMC’s decision to cut interest rates, Bitcoin and other crypto assets experienced a rally. However, there are concerns about the impact of further rate cuts and policy decisions on the market. Governor Bowman’s preference for a smaller cut and Chair Jerome Powell’s caution about aggressive policy loosening indicate a nuanced approach to monetary policy. Market participants are closely monitoring economic indicators and the direction of the Fed fund rate in the coming months, especially with the upcoming US election. This highlights the ongoing influence of traditional monetary policy on digital assets and the need for cautious decision-making in the cryptocurrency market.
